Daniel Politzer’s debut as J.P. Morgan’s lead gaming analyst brought a plethora of reactions. Politzer summarized the feedback in a June 26 investor note.
Las Vegas Sands, Politzer began, felt like “a battleground stock.” Bullish investors think it lowly valued and that the market is paying too much attention to cash-flow margins rather than cash flow per se. Bears, by contrast, were described as being content to sit out Sands, still cautious toward Macau-facing stocks.
Debate swirled around Macau in general. Investors were described as questioning whether a recent upturn was a true reversal or promotion-based or event driven. Asked Politzer, “How much does it matter?”
Although Polizter felt little adverse reaction toward his top stock pick, Penn Entertainment, he “didn’t get the impression it was a crowded long either.” Investors mostly had questions about the future of ESPN Bet, whose fate will be decided in the third quarter of 2026.
Beyond Penn, “Investors are broadly wondering if the recent uptick in regional gross gaming revenue growth is sustainable, and similarly, what’s been driving it,” the analyst wrote. “Possible explanations: promos from some operators (though it’s hard to believe this would buoy the entire market), favorable calendar, and/or a healthy consumer, albeit one with no visibility into the future and thus preference for smaller/experiential purchases over large outlays/vacations.”
At least digital gambling was seen to skew positively, as it was felt that the worst of state-level tax increases were behind the industry now. Second-quarter earnings per share were expected to beat estimates.
Politzer’s Neutral rating for MGM Resorts International produced a ho-hum reaction on Wall Street. By contrast, Caesars Entertainment was seen to be attractively valued even before promised share repurchases. However, for the stock to appreciate, Politzer wrote, regional casinos couldn’t dare underperform and those on the Las Vegas Strip needed to show stability.
Investors were characterized as “fairly positive” on DraftKings, expecting its second-quarter cash flow to exceed previous estimates. J.P. Morgan had been bullish in that regard, projecting $251 million, but even that was seen as too low.
However, Politzer forecast a $205 million cash-flow hit (base-case scenario) to DraftKings in 2026. This was partly on account of a new 51 percent handle tax in Illinois, despite a mitigating customer per-bet fee. Other contributing factors were a boost in the New Jersey sports betting/igaming tax to 19.75 percent and smaller increases in Maryland and Louisiana.
