Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Gaming sector’s outlook positive
David Katz of Jefferies is upbeat on the gaming sector’s prospects this year noting that based on second-quarter earnings, “we reiterate our bullish view on the online gaming sector, while reflecting recent state tax increases in our estimates,” Katz wrote on July 2. “For DraftKings, we expect a positive 2Q, though 2H25 and FY26 move lower on taxes, and on our estimated spending provision for entry into prediction markets.
“For Sportradar, our trim is due to FX adjustments and including expected value of the IMG deal. Estimates for Rush Street and Gambling.com are principally as prior. Reiterate Buy on all.”
DoubleDown Interactive balance sheet finds approval
David Bain of Texas Capital Securities on July 1 examined DoubleDown Interactive, writing that the company’s “current net cash of ~$9 per share rivals its share price and its negative CY25E/CY26E EV/EBITDA valuation is rarely seen in equities.
“Despite its extraordinarily low valuation, in our view, DDI generates over ~$2.50 per share of visible, net free cash flow driven by its high-margin, asset-light online games business. Further, our estimates exclude an increased mix of direct-to-consumer (D2C) payments, regulatory-driven contraction of sweepstakes gaming competition and likely 2026E igaming cash flow inflection. DDI’s balance sheet flexibility offers dividend and M&A optionality – we believe DDI is eying both. While our price target is well over double DDI’s stock price, we believe our underlying 2025E 4x EV/EBITDA multiple target from which it is derived is un-heroic.”
Bally’s on Rating Watch Negative list
Fitch Ratings on July 2 placed Bally’s Corporation and its debt on Rating Watch Negative (RWN).
“The RWN reflects elevated EBITDAR leverage from the pending combination of its international interactive business with Intralot (CCC+; Rating Watch Positive) and execution risk regarding the Twin River sale-leaseback transaction,” a release stated. “Proceeds are expected to be used to repay a large portion of its senior secured 2028 term loan and increase financial flexibility for Bally’s Chicago project commitments. However, if leverage remains elevated or Bally’s is unable to release the Twin River property from its collateral pool, the rating could be downgraded.”
U.S. RevPAR down in top 25 markets
Dan Politzer of J. P. Morgan July 2 looked at U.S. Revenue Per Available Room, noting that “Top 25 markets trailing all other markets. Top 25 markets revenue per available room was -2.8% to $144 vs. all other markets revenue per available room +2% to $104. Luxury continues to outperform with running 28 days revenue per available rom +3.8%, distantly followed by upper upscale -0.1%, and economy the laggard -3.1%. U.S. 2Q25 to date revenue per available room tracking year-over-year: Total U.S. -0.3%; luxury +4.5; upper upscale -0.1%; upscale -1.1%; upper midscale -2%; midscale -2%; economy -3.4%.”
IGT sale modestly positive
Jefferies’ David Katz July 7 also looked at the sale of IGT’s gaming and digital business. “The firm received ~$4B of net cash proceeds and also disclosed plans for allocating the funds, including a $3/sh special dividend and $500 million buyback program,” Katz wrote. “We view these actions as a modest positive for shares and believe the focus now shifts towards executing its lottery and digital strategies.”
.
