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: DraftKings (DKNG) and Disney's (DIS) ESPN are near signing an exclusive partnership, Action Network's Darren Rovell reported, citing sources. ESPN was seeking a partner in hopes of securing $3B over a period of time that would lead to a sportsbook rebranding itself with the ESPN brand, but that's not the case with this deal, as the agreement is a massive exclusive partnership that will have shows and perhaps odds integrated into game broadcasts. “We have a great, long-standing relationship with ESPN,” said DraftKings in a statement. “However, we speak to a variety of companies on a regular basis and don’t comment on the specifics of those conversations.” Shares of DraftKings were up 4% in late afternoon trading on Friday following Thursday night's report.

TransAct Technologies Incorporated (TACT) announced that it has been selected by Sky River Casino located in Elk Grove, California to provide TransAct's Epic Edge TITO printer in all slot machines within the 100,000 square foot gaming floor. Sky River Casino was developed and built for the Wilton Rancheria Tribe by Boyd Gaming (BYD) who will operate their 2,000 slot machines and 80 table games. "TransAct is ecstatic to support Sky River Casino's commitment to giving guests a top-notch gaming experience, and the Epic Edge is the perfect fit to meet their goals," said Bart Shuldman, CEO of TransAct Technologies.

Horseshoe Casino Baltimore filed an application for a mobile sports betting license that delivers on a promise to include a significant ownership interest by local women and minority partners. Under the terms of the application - which was submitted under the name CZR Maryland Mobile Opportunity, and is pending regulatory review and approval - women and minority partners will hold a 40% ownership interest in the mobile gaming license that would be utilized by Caesars Sportsbook (CZR). Partners in CZR Maryland Mobile Opportunity's mobile gaming license application include: PRT 2-Digital, a Baltimore-based partnership group including local businesspeople Eddie Brown, Cecil Flamer, Maria Beckett and James Scott, Jr.; Letha Christian, a local information technology professional and Caesars Entertainment, majority owner and operator of Horseshoe Baltimore.

BetMGM, a sports betting and iGaming operator owned by MGM Resorts (MGM) and Entain (GMVFH), announced the launch of its National Hockey League-branded casino games including roulette, blackjack, baccarat and the new live Money Wheel game, Dream Catcher. All games are available to players in New Jersey, Ontario, Pennsylvania and Michigan, the company said in a statement. "The launch of these one-of-a-kind games further strengthens our relationship with the NHL," said Oliver Bartlett, BetMGM's Director of Gaming.

Elys Game Technology (ELYS) announced it has entered into an agreement to expand its current partnership with the Grand Central Restaurant and Sportsbook, by establishing a new joint venture, JV, to open a second sportsbook location in Washington D.C. The specific location has not yet been disclosed and is subject to approval by the DC Department of Small & Local Business Development, DSLBD, and DC Office of Lottery and Gaming, DCOLG. Michele Ciavarella, executive chairman of Elys Game Technology, commented, "Our Management Services Provider license with Grand Central Restaurant and Sportsbook, marked the first Class-B, small-business sportsbook location of its kind in the U.S. We are extremely pleased with the strong performance of this first location in the Adams Morgan district of DC, as illustrated by the continuous growth in betting handle. Given this joint success, we are proud to now announce plans for a second sportsbook location with the ownership of Grand Central in Washington D.C."

Macau's gaming bureau reported September gross revenue from games of fortune in the region was down 49.6% year-over-year to 2.962B patacas.

CALIFORNIA DREAMING: With polling showing that both California sports betting initiatives are heading toward defeat, people are considering how California can move forward on the issue, Matthew Kredell of Play CA reported. Victor Rocha, owner and editor of Pechanga.net and an enrolled member of the Pechanga Band of Lusieno Indians that led support of in-person tribal sports betting Prop 26 and opposition of online sports betting Prop 27, believes that a legislative compromise is the way to go. But only if the sports betting operators let the tribes take the lead. Rocha explained to PlayCA, “There needs to be one sports betting measure on the ballot that everyone gets behind. And the best way to reach such a compromise is through the legislature. Otherwise, each side could keep spending $500 million each election cycle to get nothing.” Rocha contended that operators should have let Prop 26 run unopposed and supported it. He thought doing so would have launched retail sports betting in California, and the tribes would have been more prepared to talk online sports wagering in 2024. Rocha explained that tribes know they will have to work with the companies behind Prop 27 if they are to move into sports betting. However, they seek to control the terms. “The reason tribes don’t want 27 is about control. The tribes wouldn’t have written the language like that. They wouldn’t have given them so much. The way they squeezed out the smaller companies and stuff like that. Tribes have elevated themselves from poverty and removed themselves from oppressive governments through gaming. Now they want to take the future of gaming from us. It’s about online gaming and we know that. That’s why the fight is so furious.”

STATE UPDATE: The Colorado Division of Gaming released its August monthly sports betting figures. Total online handle and gross gaming revenue, or GGR, in August were up 38% year-over-year and 69% year-over-year, respectively. The total online handle for August was up 12% month-over month. The total online gross gaming revenue reported was $25.3M vs. $20.8M in July. Total online handle and GGR both made up over 99% of the total wagers placed in August, with a total online win percentage of 8.78%. Benchmark analyst Mike Hickey told investors that Virginia sportsbooks posted state-record 13% hold in August, on handle of $285M. As part of what is shaping up to be a "historic rout" of the sports wagering public nationally for August, operators in Virginia more than kept pace with a staggering 13% hold, Hickey noted, citing figures released Friday by the Virginia Lottery. It was the sixth time in 20 months of wagering the sportsbooks' win rate reached double figures, with the previous record of 12.3% set in July 2021.

FOURTH QUARTER: Weeks 4-16 of the NFL season will take place during Q4, complemented by a more active calendar for other major sports, Canaccord analyst Michael Graham noted. Outcomes during Week 4 were not as strong for sportsbooks as those in the first three weeks of the NFL season, with just one of the five largest underdogs winning outright and six underdogs winning outright overall. DraftKings' Director of Trading Johnny Avello told the Action Network that "It was the customers' turn this weekend" as the public bet heavily on the Kansas City Chiefs, who helped cash numerous parlays after winning outright on Sunday Night Football. The analyst said in New York $29.8M of GGR was generated from $301M of wagers placed during NFL Week 3. FanDuel (PDYPY) led with 40% of total handle, up from 37% in Week 2, and the company's 10.9% hold rate helped it generate 45% of total GGR, up slightly from 44% last week DraftKings was responsible for 32% of total handle in Week 2 .

ANALYST COMMENTARY: H.C. Wainwright analyst Scott Buck downgraded Esports Entertainment Group (GMBL) to Neutral from Buy with a price target of 15c, down from $1.50. Potential asset sales could provide some balance sheet relief and provide necessary operating cash as the business moves toward profitability and positive cash generation, Buck tells investors in a research note. However, pricing conditions are likely different today versus 2021 when all of these assets were acquired, says the analyst. Buck believes Esports management is taking the right steps in streamlining the business, but says dilution from the September capital raise and an increased level of uncertainty moving forward causes him to move to the sidelines.

Canaccord analyst Jason Tilchen initiated coverage of Penn Entertainment (PENN) with a Buy rating and $50 price target. Commercial gambling in the U.S. surpassed $50B of gross gaming revenue, or GGR, for the first time last year, noted Tilchen, who expects the industry to roughly double over the next decade, driven mainly by a rapid expansion of the online sports betting and casino markets. Penn Entertainment's recent name change highlights the importance of its owned media properties as Barstool and theScore are both expected to deliver efficient customer acquisition and engagement, while the company's omnichannel strategy also differentiates it from most peers, Tilchen told investors. At current levels, investors can access "a very reasonably valued, consistent, and strongly profitable regional casino business" with upside from the rapidly expanding online sports betting and iGaming markets, the analyst added.

Exane BNP Paribas analyst Alistair Johnson initiated coverage of DraftKings with an Underperform rating. The analyst says the company's profitability "remains a long way off." Johnson initiated coverage of Flutter Entertainment with an Outperform rating. The analyst views the company as "best placed" within online gaming given its "best-in-class" profits in the U.S.

Deutsche Bank analyst Carlo Santarelli initiated coverage of Bally's (BALY) with a Hold rating and $23 price target. Given its "well-diversified portfolio of assets," Bally's is relatively well positioned within the peer group "for whichever economic environment emerges in gaming over the near to medium term," Santarelli told investors. Further, he believes the company represents one of the better growth stories in the regional gaming sector. Nonetheless, Santarelli views the current market climate as "challenging."

BofA analyst Shaun Kelley downgraded Sportradar (SRAD) to Underperform from Neutral with a price target of $8, down from $14. While Kelley believes in Sportradar's data/contract-driven business model, it has more international exposure than any company under coverage, and its B2B model makes it hard to channel check, the analyst tells investors in a research note. Kelley believes margin improvement could be made harder by European macro uncertainty, as well as sports rights cost inflation.

Susquehanna analyst Joseph Stauff lowered the firm's price target on Caesars to $27 from $32 and reiterated a Negative rating on the shares. The analyst still thinks there is downside as the he believes 2023 estimates are too high and he strong trends from the summer seem unsustainable especially after recent concerns about destination leisure from cruise lines and airline booking trends not strengthening in September versus the early part of the quarter.

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).