Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
The state of gambling heading into 2024
In an Oct. 30 release Legislative Expert Update – The more things change, the more they stay the same, Brendan Bussman, managing partner for B Global and Truist Securities’ legislative expert, wrote that he’s hearing the same conversations about the gaming industry that were prevalent 45 years ago when the state of New Jersey legalized gambling.
“As we head into post-G2E and look forward to ICE London in February 2024 when the world convenes again, the debates continue on what is a part of the white, the gray, or the black market,” Jonas wrote. “As technology, innovation, and loopholes continue in the legislative and regulatory construct, there will always be individuals that push the envelope. This typically has a pull from both sides to see where things may lie in the future. You see two of those battles happening in land and online currently with the debate in several states over `skill-based’ or `gray’ machines to what you are seeing between sports betting and Daily Fantasy Sports on the games that are allowed. The battle will continue to rage between existing licensed operators in the market versus those that are pushing the envelope in other ways.”
Gaming and Leisure Properties
Jefferies equity analyst David Katz, Oct. 26 issuing a “Buy” rating for Gaming and Leisure Properties, wrote that there were “no surprises in the quarter and (it) should be neutral for the shares, although GLPI is becoming more active on acquisitions and building its pipeline, which supports our long-term thesis. We believe the commentary and activity support the view that the increased cost of traditional financing positions GLPI favorably on a comparable basis.”
Truist Securities analyst Barry Jonas also commented on GLPI, writing, “GLPI Q3 adjusted funds from operations /share was in-line with us/Street, while both ends of 2023 AFFO/share guide were raised (+0.4% at the midpoint). Management noted it still saw M&A opportunity despite a challenged market environment, though expects deal sizes to be smaller. We think smaller deals could still move the needle here, and GLPI’s strong tenant relationships provide further growth avenues. We continue to preach the relative safety of GLPI and gaming REITs.”
Las Vegas Strip room rates
In a weekly survey of Las Vegas Strip room rates for the week of Nov. 19 to Nov. 25, 2023, J. P. Morgan analyst Joseph Greff wrote, “Midweek rates are +7% and weekend rates are +3% (+5% overall). By company: MGM Resorts rates are -17% for the midweek and -3% for the weekend (-11% overall); Caesars Entertainment rates are -21% for the midweek and +7% for the weekend (-8% overall); Wynn Resorts rates are +184% for the midweek and +42% for the weekend (+130% overall); Venetian/Palazzo rates are -4% for the midweek and +5% for the weekend (-1% overall).”
