Wall Street Bets: Analysts on gaming, leisure, and lodging, Juneteenth travel, Michigan revenue, VICI, and Chicagoland gaming

June 26, 2023 12:11 PM

Wall Street Bets: Analysts on gaming, leisure, and lodging, Juneteenth travel, Michigan revenue, VICI, and Chicagoland gaming

Photo: CDC Gaming Reports
  • Rege Behe, CDC Gaming Reports
June 26, 2023 12:11 PM

Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

In a note released June 25, Jefferies Equity Analyst David Katz said the company recently hosted 20 gaming, leisure, and lodging companies at a conference in Nantucket.

Katz wrote that “In general, we come away comfortable with our theses:

  1. “Continue to focus on the digital gaming market momentum and mergers & acquisition potential.”
  2. “We like the dynamic activity in gaming equipment more than casinos.”
  3. “Lodging and leisure companies remain confident in numbers albeit with limited forward visibility.”

Truist Securities Analyst C. Patrick Scholes, in a statement issued June 21, remarked that because “Juneteenth is a relatively new federal holiday (2021), we do not have a strong position on the degree of impact to the U.S. lodging results (or international outbound travel).

“Juneteenth did not come up in many of our meetings at the NYU and NAREIT conferences earlier this month. Given that Juneteenth is positioned closely between two established federal holidays and the nature of the holiday is perhaps not as leaning to vacations as Memorial Day or Independence Day, our initial take is that the Juneteenth travel impact was fairly modest for a major holiday.”

Commenting on the Michigan Gaming Control Board’s May revenue statement, J. P. Morgan analyst Joseph Greff wrote that the total handle in the state for online sports betting handle was $288.3 million, “down 14% year-over-year. Share leaders included FanDuel (35% share of handle), Draft Kings (28%), BetMGM (16%), Caesars Entertainment (9%), and Barstool (5%). We note these five operators accounted for 92% of online sports betting handle in the month, similar to recent trends.”

Fitch Ratings June 26 issued a rating action commentary affirming the long-term issuer default ratings (IDR) of VICI Properties as “BBB.”

“Positively, the company has stable occupancy and rent collections with CPI-linked escalators, though overall gaming REITs have weaker contingent liquidity compared with more traditional CRE property types, which is a drag on the rating. The ratings also contemplate Fitch’s expectation of deleveraging below 5.5x by year end 2024; if deleveraging is delayed as a result of operational issues or capital allocation, the ratings or outlook may be revised.”

Truist Securities recently hosted an investor trip to several properties in the Chicagoland area. In a June 20th note, analyst Barry Jonas wrote that “Our headline takeaway is that any unfavorable macro impact has been limited with customer spending patterns consistent and resilient, though it’s clear there was some overearning last year. Still, a number of factors make for a unique market backdrop – including a slew of new supply coming, the continued rollout of VGTs and the even the possibility of igaming at some point, all while Bally’s works to put a ~$1.7B flagship property in the heart of it all.”

Rege Behe is lead contributor to CDC Gaming Reports. He can be reached at rbehe@cdcgaming.com. Please follow @RegeBehe_exPTR on Twitter.