Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Penn Entertainment enters football season
Jeffries analyst David Katz August 25 looked at how the impending football season will affect Penn Entertainment.
“Penn and the beginning of football season for ESPN Bet remain the most discussed issue among investors,” Katz wrote. “For the bull case, there is little value priced into the shares at 7.1X 2025 EBITDA (we assign a 6.5X-7.0X level for the land-based Opco business) and any prospective progress in performance or earnings suggests upside.
“For the bear case, the late entry into a competitive, duopoly-led market inherently limits the parameters of success on a significant investment. Heading into the season, the size of the ESPN funnel, the daily fantasy legacy momentum and the expected positive data points from the start of the season could create potential upside; however, we remained measured. We expect Penn shares to be among the most dynamic in the group over the next several weeks.”
Las Vegas Strip room rates
J.P. Morgan’s Joseph Greff surveyed Las Vegas room rates between September 15-21, 2024.
“For the survey period, relative to the comparable period 2023, midweek rates are +42% and weekend rates are +7% (+28% overall),” Greff wrote on August 26.
“By company: MGM rates are +62% for the midweek and -1% for the weekend (+35% overall); Caesar Entertainment rates are +64% for the midweek and -10% for the weekend (+32% overall); Wynn Resorts rates are +31% for the midweek and +40% for the weekend (+34% overall); Venetian/Palazzo rates are -29% for the midweek and +111% for the weekend (+8% overall).”
August revenue per available room
Analyst C. Patrick Scholes of Truist Securities looked at revenue per available room in an August 21 statement.
“August revenue per available room growth looks to be an improvement from June and July, likely several points of better growth, as August has shown three consecutive weeks of positive year-over-year revenue per available room growth,” Scholes wrote. “However, this lift is likely from August 2024 having five weekends. Comparatively, August 2023 had four weekends as opposed to a ‘real’ underlying improvement in leisure demand. Current month-to-date revenue per available room through August 17: +3.2%.”
New York online sports betting
Following the most recent weekly online sports betting figures (week ending 8/18/24) released by the New York Gaming Commission, quarter-to-date OSB GGR is tracking up 21% year over year, while handle is tracking up 26%, implying a 10.4% hold rate, versus 10.7% during the comparable 2023 period,” J. P. Morgan analyst Joseph Greff wrote August 23. “We note that quarter-to-date figures reflect the first seven weeks of the 3Q24.
“For the week ending August 18, 2024, GGR was up 68% year over year, while handle was up 28%, implying a 12.0% hold rate versus 9.2% in the comparable period ended August 20, 2023.”
Rege Behe is lead contributor to CDC Gaming. He can be reached at rbehe@cdcgaming.com. Please follow @RegeBehe_exPTR on Twitter.
