Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
The fortunes of Penn Entertainment and online sports betting were noted by Wall Street analysts last week.
Penn Entertainment
Jefferies analyst David Katz June 9 wrote that “Penn Entertainment is the most topical name in our coverage, given the ongoing commentary both from Penn management on its strategies and from other entities presumed to be contemplating an offer post the public activist commentary. We expect activism to remain in the background as EPSN Bet approaches football season, which is important for the business to establish its path forward.”
J.P. Morgan analyst Joseph Greff June 6, commenting on an investors dinner with Penn Entertainment management, wrote that “Penn continues to be focused on top-of-funnel acquisition from the ESPN database and reiterated its laser focus on ESPN BET product improvements and ESPN ecosystem integrations ahead of the football season, which management believes will ultimately grow its wallet share towards levels commensurate with its active user share observed by third-party data providers.”
Greff added that Penn Entertainment “Continues to see strong and improving trends in ESPN BET active user share and downloads, and feels an emphasis on reducing friction from the experience and reaching a higher level of product parity with market leaders come football season should support increased wallet share on the platform. Improved same game parlay functionality, better merchandising, centralization (i.e., parlay hub), and increased personalization will be key in driving higher average leg counts and parlay mix. Penn noted new CTO Aaron LeBerge will likely bring an experienced team with him, and sees increased integrations with ESPN properties improving the user experience and increasing engagement.”
Online sports betting
Truist Securities analyst Barry Jonas, in a June 5 note, wrote “Online sports betting-related equities have been mixed lately, we think given both regulatory headwinds and some consumer concerns. Still, we don’t expect much movement in the market or landscape (share or GGR/handle figures) in the coming months, but like the setup for the fall as pent-up excitement for football season could overshadow any consumer weaknesses. In our view, ESPN Bet’s rollout is the next clear industry catalyst – maybe bolstered by recent activist activity, as we’ve also argued there’s little to zero credit for Digital in Penn’s valuation today.”
Jonas added that in regard to OSB, Draft Kings and FanDuel are still most prominent. “It’s the legacy daily fantasy sports operators’ world until proven otherwise – the two continue to lead the rest of the pack, modestly more so in 2024 (combined,~73% of handle share from Jan-Apr) vs. 2023 (combined, ~72% of handle share in FY2024). FanDuel (~38% handle share in 2024) continues to lead DraftKings (~36%) for the top spot, and it has for some time now.”
