Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Sports-betting outlook
With college and professional football seasons nearing, Truist Securities analyst Barry Jonas looked at sports betting prospects. In an August 24 note, Jonas wrote, “Both May (+23% year-over-year) and June (+42% year-over-year) saw significant SS online sports betting revenue growth on modest handle growth, with initial July results positive and August more mixed. iGaming revenue has been mixed on a month-to-month basis, though continues to show meaningful growth year-over-year with August weekly data positive. We recently upgraded DraftKings (Buy) and downgraded Penn (Hold), as DraftKings’ robust Q2 beat proved a more visible path to profitability while we await more ESPN Bet proof points for Penn. Also, we make slight tweaks to our Penn and Bally’s (Buy) models/estimates post-earnings.”
Reality Income acquiring share of Bellagio
Commenting on Reality Income’s definitive agreement to acquire 22% of Blackstone Real Estate Income Trust’s 95% stake in Bellagio for $950 million, Jefferies equity analyst David Katz, in an August 27 note, wrote about the implications of the deal: “1. The valuation on the property is reset to $5.1 billion from $4.25 billion when the original sale to Blackstone was executed in November 2019 which is supportive for Caesars, MGM and VICI. 2. Further expansion into gaming for Reality Income, since acquiring the real estate of Encore Boston Harbor from Wynn. 3. Validation of alternative funding structures by real estate investment trusts in gaming, which is supportive of VICI and its development loans in experiential leisure.”
Las Vegas Strip rates
Commenting on Las Vegas Strip room rates, J. P. Morgan analyst Joseph Greff August 28 wrote, “For the survey period (September 17-23, 2023) relative to the comparable period 2022, midweek rates are -7% and weekend rates are -3% (-5% overall). By company: MGM rates are -25% for the midweek and -2% for the weekend (-17% overall); Caesars’ rates are +30% for the midweek and +7% for the weekend (+19% overall); Wynn rates are -31% for the midweek and -12% for the weekend (-26% overall); Venetian/Palazzo rates are +67% for the midweek and -26% for the weekend (+26% overall).
