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: Churchill Downs (CHDN) announced that it has signed a definitive agreement to acquire Ellis Park Racing & Gaming in Henderson, Kentucky, from Enchantment Holdings, an affiliate of Laguna Development Corporation, for total consideration of $79M in cash, subject to certain working capital and other purchase price adjustments. CDI will also assume Ellis Park's opportunity to construct a track extension facility in Owensboro, Kentucky.

DraftKings (DKNG) announced that Amazon (AMZN) has selected DraftKings as a sponsor for Thursday Night Football on Prime Video. The multi-year collaboration between DraftKings and Amazon will deliver fans pregame content and betting offers every Thursday throughout the NFL season, beginning yesterday. As part of the multi-year agreement, TNF will contain DraftKings integrations in the live pregame, including odds and additional sports betting insights. DraftKings and Amazon will also collaborate on TNF-themed offerings, including same-game parlays, which will be available on the DraftKings Sportsbook app.

On Monday, Cathie Wood's ARK Investment bought 37.6K shares of DraftKings

MACAU CONCESSIONS In the final hours before the Macao SAR Government closed the submission period for bids under its re-tender process for new gaming concessions in the region, a company called GMM submitted a bid and it was later confirmed that GMM is associated with Genting Malaysia and Genting Group chairman and CEO Lim Kok Thay, according to Inside Asian Gaming. Adding GMM means there are a total of seven bids for a maximum of six concessions to be granted as all six current concessionaires have also submitted bids, the report noted.. Melco Resorts & Entertainment (MLCO) announced that Melco Resorts Macau, a subsidiary of the company, submitted its detailed proposal in relation to the public tender for new gaming concessions launched by the Macau Government in July this year. Also, Las Vegas Sands (LVS) and Sands China (SCHYY) announced the submission of the Sands China group's application for a new 10-year gaming concession in Macao. The company also announced that Dave Sun MinQi, who has served as Sands China's chief financial officer since 2017 and has been with the company since 2007, has been proposed to also act as the future managing director of Venetian Macau. Additionally, Grant Chum Kwan Lock, who serves as chief operating officer and a member of the Sands China's board of directors, is also taking on the role of executive vice president of Asia operations for Las Vegas Sands.

ANALYST COMMENTARY: Credit Suisse analyst Benjamin Chaiken upgraded Wynn Resorts (WYNN) to Outperform from Neutral with a $117 price target. At current levels, the analyst thinks Wynn is one of the more compelling stories in gaming. He sees potential upside to Vegas trends driven in part by the convention center expansion, almost doubling the available meeting space. Chaiken also thinks Macau sentiment is near a bottom, and although the timeline of a recovery is admittedly unclear, he believes that is more than priced in. When that happens, the analyst thinks a mix shift into higher margin mass/premium mass gaming will benefit EBITDA margins, not reflected in street estimates. Additionally, valuation is compelling, and presents an attractive risk/reward, he argued.

Oppenheimer analyst Jed Kelly noted that Amazon selected DraftKings to be its exclusive odds provider for Thursday Night Football. The analyst believes the Amazon sponsorship costs are already included in DraftKings' 2022 guidance and that DraftKings' TNF exclusivity will accelerate its same-game parlays product adoption, and highlight the similar benefit FanDuel received from exclusively branding its SGP product around the TNT Thursday night NBA game. His industry checks and state data analysis indicated that FanDuel was able to drive higher SGP adoption, gain greater handle share and attract more casual fans from its $10 risk-free SGP that it promoted every Thursday night during the past two NBA seasons. Kelly believes DraftKings can leverage its exclusivity with Amazon to create compelling products and promotions around SGP to generate higher adoption. The analyst has an Outperform rating on DraftKings shares.

Guggenheim analyst Curry Baker raised the firm's price target on DraftKings to $34 from $31 and reaffirmed a Buy rating on the shares after updating the firm's model to reflect favorable week one outcomes in the NFL, strong download and relatively better daily active user performance based on third-party app data, the company's ongoing focus on cost controls and a more rational promotional environment.

OPERATOR INSIGHTS: According to Jefferies analyst David Katz and his digital gaming brand matrix, August's data showed the largest three operators holding on to their overall score, while the five behind them remained tightly contended. FanDuel (PDYPY), DraftKings, and BetMGM (MGM) rounded out the top three. Katz noted that FanDuel continues to lead in monthly active users, while DraftKings leads in downloads and search interest. FanDuel and DraftKings are neck and neck in most categories, while BetMGM comes in third in both downloads and MAUs. The analyst told investors in a research note that there have been early signs this NFL season could be a productive one for the group. GeoComply suggested record-breaking mobile checks for online sports betting over the opening weekend, up over 70%. Lastly, the analyst's most recent survey work suggested higher average spending compared to last year and some data supporting demand stickiness and player loyalty. The operators were ranked by Jefferies by index score as follows:

FanDuel
DraftKings
BetMGM
PointsBet (PBTHF)
Barstool Sportsbook (PENN)
BetRivers (RSI)
Caesars Sportsbook (CZR)
Bet365
Fox Bet
WynnBet (WYNN)

STATE UPDATE: Illinois online handle for July totaled $496.1M, down 18% from June. Overall, the state reported $516.4M handle. Tier one wagers, defined as bets on final match results, brought in $238.2M or 48% of total handle. Tier two wagers, such as prop bets or over/unders, brought in bets worth $257.9M or 52% of total online handle. The state's market share winners include DraftKings, FanDuel, and Rush Street Interactive.

Indiana reported August online sports betting handle of $222.4M, or a 13% sequential increase. Gross gaming revenue, or GGR, reported for August was $23.6M, a 26% increase from July. Indiana is the 17th largest U.S. state with an approximate 6M population. Market share winners include DraftKings, FanDuel, BetMGM and WilliamHill. Players wagered $77.6M on both professional and college Baseball in August, $17.6M (8% of total) on football and $12.5M on basketball. The rest of the market share is attributed to parlays, which totaled $64.6M and other sports which totaled $62.3M.

Iowa sportsbooks generated over $14.4M in revenue on $122.6M in wagers in August, with $11.7M and $110.1M coming from online wagering, respectively. August's reported total handle saw a 13% month-over-month increase from both retail and online bettors. Like Illinois, Iowa used to be an in-person registration state, meaning you had to travel to a physical casino to register for an account. As of the start of 2021, in-person registration expired almost immediately increasing the states handle. Online market share winners by handle include Caesars, DraftKings, Betfair and BetMGM.

FOOTBALL RETURNS: The NFL is a significant driver of results for U.S. sports betting operators given the level of wagering volumes on football relative to other sports, and this dynamic is particularly notable in Q3 given the relatively light sports calendar in the first two months of the quarter, Michael Graham of Cannacord told investors. Underdogs covered in four of the five games with the largest spreads, winning three of those games outright, and thus these outcomes likely led to better-than-expected hold for sportsbook operators.

With the new NFL season now underway and its importance in proving operators' path to profitability, Katz revisited his thesis through an updated player survey. The survey said DraftKings and FanDuel are leading in usability and player loyalty, while BetMGM and Caesars are gaining momentum. Overall, 42% of bettors indicated plans to wager more this season compared to 29% who intend to wager less. Of those who intend to wager less, over half attributed it to budget issues, and only 14% attributed it to the decrease in promos. Katz said the finding is surprising as operators have generally indicated no signs of demand slowing during Q2 earnings. He told investors that he expects any macro weakness may be offset by new sign-ups or higher average spend.

August sports win margin index was 105,5% above the average index since 2013 and 1% above the index in the last two years, according to Ed Young of Morgan Stanley. This was the third strongest margin observed this year and up 55% vs. August 2021. UK margins saw the best growth, with key markets 19% better and Germany the weakest observed in 12 months though only -9% year-on-year on a soft comp.

IGAMING SEASON: Roth analyst Edward Engel sees a tactical opportunity to own U.S. iGaming stocks ahead of the NFL season and upgraded DraftKings to Buy, while reiterating a Buy rating for for RSI. Engel contended OSB/iGaming stocks have historically outperformed between mid-summer and the start of NFL season, when the sports calendar swings from trough to peak. Investors are buying into the narrative of online sports betting profitability, after Q2 commentary from several operators, the analyst said in a research note. An intense marketing and promotional environment over the NFL season is expected, but he sees less intensity vs 2H21 after several operators tapered back in 2022. Engel concluded that a softening macro favors iGaming stocks as investors rotate into secular growth stories that benefit from a nationwide pull back in ad spend.

POTENTIAL IN THE LONE STAR STATE: The push to legalize Texas sports betting has picked back up ahead of the state's legislative session, according to Pat Evans of Legal Sports Report. The Texas Sports Betting Alliance sent out a release last week reminding Texans that NFL betting is not legal in the state. The last effort to legalize sports betting in Texas fell short in 2021. Supporters are preparing for another push for legalization in 2023, knowing that failure means another two-year wait for the next session. “The state should allow Texans the freedom to decide whether or not to participate in sports betting and protect those who do so,” Texas Sports Betting Alliance Spokesperson Cara Gustafson said in a release. “Football will continue to dominate the Lone Star State and sports betting will only grow along with it. It’s time to honor Texas’ core value of individual freedom and legalize sports betting.” Texas professional sports teams help make up the Texas Sports Betting Alliance and many of them have already signed sportsbook partnerships. Partnerships in Texas include:

Austin FC-PointsBet
Dallas Mavericks-Betway (SGHC)
Houston Dynamo-Fubo Sportsbook (FUBO)
Houston Astros-BetMGM

On one side of the spectrum, gubernatorial candidate Beto O’Rourke supports sports betting, while incumbent Lieutenant Governor Dan Patrick vehemently opposes it. Governor Greg Abbott does not oppose it as strongly as Patrick.

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).