Welcome to the latest edition of "Bet On It," where The Fly looks at news and activity in the sports betting and iGaming space.

SECTOR NEWS: Elys Game Technology (ELYS) announced that on December 31st the company's wholly owned subsidiary Elys Gameboard Technologies received approval for Type C sports gaming proprietor licensure from the Ohio Casino Control Commission, OCCC, for a period of five years effective January 1. The commencement of betting transactions in Ohio remains subject to ongoing proprietor suitability and continuous maintenance of compliance requirements of the Ohio Lottery as well as any additional required compliance and certifications for the duration of the license. As previously announced, the Company has commenced programming of its technology platform to comply with betting compliance specifications of the Ohio Lottery and while actively pursuing as many as up to 3,000 potentially approved host locations available, plans to launch the currently signed 100 plus host locations in phases commencing in the first half of 2023 and in time for ensuing major league sports season in mid-August.

Gaming and Leisure Properties (GLPI) completed the previously announced acquisition from Bally's Corporation (BALY) of the land and real estate assets of Bally's Tiverton Casino & Hotel in Tiverton, RI and Bally's Hard Rock Hotel & Casino Biloxi in Biloxi, MS for $635M in total consideration, inclusive of $15M in the form of OP units. These properties were added to the Company's existing Master Lease with Bally's. The initial rent for the lease was increased by $48.5M on an annual basis, subject to contractual escalations based on the Consumer Price Index, with a 1% floor and 2% ceiling, subject to CPI meeting a 0.5% threshold. The Master Lease has an initial term of 15 years followed by four five-year renewals at the tenant's option. Normalized rent coverage on the Master Lease - which includes Bally's Dover Casino Resort, Bally's Evansville Casino & Hotel, Bally's Quad Cities Casino & Hotel and Bally's Black Hawk Casinos - is expected to be 2.0x in the first calendar year following closing. In connection with the closing, a $200M deposit funded by GLPI in September 2022 was credited to the Company along with a $9M transaction fee. Concurrent with the transaction's closing, GLPI will draw upon its previously structured delayed draw term loan for $600M to credit towards the closing. The amount of draw was influenced by the transaction's tax structuring for Bally's benefit. GLPI continues to have the option, subject to receipt by Bally's of required consents, to acquire the real property assets of Bally's Twin River Lincoln Casino Resort in Lincoln, RI prior to December 31, 2024 for a purchase price of $771M and additional rent of $58.8M.

Genius Sports (GENI) and SoftConstruct have agreed a settlement to resolve their legal dispute. As part of this settlement SoftConstruct have agreed to purchase a multi-year license to supply Genius' data via its BetConstruct and FeedConstruct channels, with such license acknowledging Genius's ownership of database rights. "Genius invests significant time, resource, and expertise in creating and developing market-leading technology and databases to collect and supply sports data products across the industry," says Jack Davison, Genius Sports' chief commercial officer. "We are delighted that the SoftContruct team have recognized this value and we look forward to working in partnership with them as we move forward." "This deal enables us to service our customers with the best data," says Armand Pinarbasi SoftConstruct's CEO. "We can now look forward to a mutually beneficial relationship in the years to come."

Macau's gaming bureau reported December gross revenue from games of fortune in the region was down 56.3% year-over-year to 3.482B patacas.

ANALYST COMMENTARY: Needham analyst Bernie McTernan named Genius Sports (GENI) his 2023 Top Pick and added the stock to Needham Conviction List in place of Uber (UBER). The stock offers a reasonable valuation with significant exposure to the secular growth story of the U.S. sports betting industry, which he expects to be more resilient than other end markets in his coverage, the analyst told investors in a research note. The company's high fixed costs should also allow Genius Sports margins to scale as revenues grow and as FX headwinds abate, McTernan adds. The analyst also noted that Uber remains his "top large-cap pick" given its emerging revenue streams from advertising and grocery, and he believes that the stock's valuation at 17.5-times expected 2023 EBITDA is "reasonable".

Stifel analyst Steven Wieczynski downgraded Penn Entertainment (PENN) to Hold from Buy with a price target of $35, down from $45. The analyst believes the Las Vegas Strip momentum "should easily continue" through 2023 and into 2024. He sees more value with Macau and Las Vegas Strip operators versus pure play regional gaming operators. Risk that spend levels or margins will deteriorate moving forward will keep shares of Penn "in check for the time being," Wieczynski told investors in a research note. He fears that consensus estimates are too aggressive at this point, and expects there might need to be some downward revisions moving forward.

On the other hand, Wieczynski upgraded MGM Resorts (MGM) to Buy from Hold with a price target of $46, up from $42. Las Vegas Strip leisure demand remains solid and there is no evidence that customer spending is softening, Wieczynski told investors. He says MGM should benefit from the reopening of Macau, potential positive news flow coming out of Japan, and any positive news around a New York gaming license opportunity.

Benchmark analyst Mike Hickey initiated coverage of Bragg Gaming (BRAG) with a Speculative Buy rating and $8 price target, calling it a "unique and compelling investment opportunity within the online gaming ecosystem." Bragg is a content driven B2B online casino technology provider that offers games and turnkey platform solutions in regulated markets in North America, Europe, and globally, said Hickey, who sees the company benefitting from expansionary market growth from existing and new markets.

BofA analyst Shaun Kelley raised the firm's price target on Wynn Resorts to $90 from $85 and maintained a Neutral rating on the shares. In a 2023 preview note on the casino gaming group, Kelley said he is "largely neutral with some caution on Gaming heading into 2023," adding that "this is the first time in over a decade we haven't had at least one Buy rating on one of the larger cap names in our group, as we await better risk-rewards." On the domestic side, he sees attractive valuations, but is concerned estimates may be too high, while "Macau is the opposite" as estimates are potentially too low, but he thinks historical valuations could be too high, Kelley noted. The analyst additionally lowered the firm's price target on Penn Entertainment to $35 from $40 and kept a Neutral rating on the shares. Also, Kelley raised BofA's price target on Las Vegas Sands to $52 from $46 and reaffirmed a Neutral rating on the shares. Lastly, the analyst lowered the firm's price target on Caesars to $50 from $55 and kept a Neutral rating.

Wells Fargo analyst Daniel Politzer upgraded Wynn Resorts (WYNN) to Overweight from Equal Weight with a price target of $101, up from $74. The analyst argues that Wynn has a viable path to recapturing most/all of its 2019 VIP EBITDA, despite the absence of junkets, through direct VIP/premium mass play, which he believes is not reflected in the stock. Politzer also notes that Wynn is highly levered to Macau's GGR recovery, now more palpable post China's policy pivot, and representing the best growth opportunity in Gaming. Further, he cites Wynn's smaller scale and premium mass offering that should allow for a speedy recovery, reasonable reopening expectations, and undemanding valuation. The analyst includes Wynn on his firm's Tactical Ideas list for Q1 2023, as he believes company-specific catalysts should drive stock outperformance during the quarter. He also raised the firm's price target on Las Vegas Sands to $53 from $45 and backed an Overweight rating on the shares as he tweaks his model to reflect China's recent policy pivot and Macau's anticipated re-opening. His conviction on the shape/speed of the recovery is low, and he thinks 2023 will be a look-through year, with the Q1/re-opening messy, potential stabilization in the Q2, and improvement in the Q3/Q4; his base case is for 2024 to be a relatively normal year of operations in Macau.

DECEMBER DOWNLOADS: U.S. December app download growth remains strong, well ahead of handle growth, Morgan Stanley analyst Stephen Grambling told investors, .citing Sensor Tower data. U.S. sports betting app downloads grew 99% y/y in December , well above the analyst's over 35% sports betting handle growth forecast, probably due to recent state launches like in Maryland and the downloads ahead of the Ohio launch on January 1. The analyst said total app downloads for December were 1.9m, down 8% vs. November, but has shown a sequential decline typically throughout history. Aggregate app downloads for the year were up 77%.In the U.S. FanDuel (PDYPY), DraftKings (DKNG), and BetMGM lead the market respectively, followed by Caesars (CZR) and Barstool. FanDuel topped the U.S. market in December with market share at 34%, slightly down vs. November share at 36%.

PRIME REAL ESTATE: In New York, the Gaming Facility Location Board has released a request for applications from operators for three potential Downstate casino licenses. However, as CBRE analyst John DeCree noted, one of the largest casino opportunities comes with a "sizable" investment. The analyst told investors in a research note that GFLB set the minimum capital investment at $500M, though this is likely a nominal placeholder for the potential scale of three new casinos in the metro area. The board also reaffirmed the $500M minimum license fee. Interested parties are on the hook for at least $1bn of capital, but potentially more, DeCree contended. Notably, the minimum gaming tax is 25% on slots and 10% on table games, but bidders could select to propose higher rates. The analyst concluded that MGM and RWNYC are front-runners for two of the three licenses. The timeline for the process remains unclear.

PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally's (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn Entertainment (PENN), Rush Street Interactive (RSI) and Wynn Resorts (WYNN).