Wall Street Bets: Growth sectors, Las Vegas Strip, Maryland

Tuesday, January 21, 2025 9:55 AM
Photo:  CDC Gaming
  • Rege Behe, CDC Gaming

Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

Growth sectors

On January 19 Jefferies analyst David Katz wrote he is reiterating our bullish stance on DraftKings, Rush Street Interactive, Sportradar, and Gambling.com. We believe that growth in the sector continues with Missouri going live, new states Minnesota/Texas/Georgia/South Carolina/Oklahoma debating legalization, ongoing double-digit growth in the earliest states, in-game betting growth, and igaming as a steady grower. We increased our US TAM (total addressable market) estimate to $50 billion by 2030 (vs. $37.5 billion prior). Given the above, we raised our 2025 estimates slightly and launched above-consensus 2026. Volatility remains for B2C players, and far less so for B2B providers.

Las Vegas Strip room rates

J. P. Morgan analyst Joseph Greff January 20 looked at the survey period February 9-15 relative to the comparable period 2024 for the Las Vegas Strip. “Midweek rates are -46% and weekend rates are -2% (-34% overall),” Greff wrote. “By company: MGM rates are -57% for the midweek and -20% for the weekend (-48% overall); Caesars’ rates are -31% for the midweek and +18% for the weekend (-12% overall); Wynn rates are -38% for the midweek and +23% for the weekend (-23% overall); Venetian/Palazzo rates are -31% for the midweek and +31% for the weekend (-15% overall).

“Relative to the full 1Q24E, our midweek rates are +1% and weekend rates are -22% (-7% overall). By company: MGM rates are -11% for the weekday and -30% for the weekend (-18% overall); Caesars’ rates are +11% for the weekday and -17% for the weekend (flat overall); Wynn rates are +13% for the weekday and -15% for the weekend (+3% overall); Venetian/Palazzo rates are +18% for the weekday and -17% for the weekend (+5% overall).”

Increase in Maryland tax rates for gambling

Truist Securities’ Barry Jonas January 15 wrote about the state of Maryland’s proposal to raise tax rates on online sports betting and table games. “The Maryland Governor’s 2025 Budget Announcement was published today, with proposals to increase its OSB tax rate to 30% (from prior 15%) as. well as its land-based table games tax rate to 25% (from prior 20%),” Jonas wrote”

“On the OSB side, Maryland would become the third state to do so (Ohio: to 20% from 10% in July 2023; Illinois: to graduated 20-40% from 15% in May 2024), with the land-based proposal the first we’ve seen. Further potential hikes in OSB rates were feared with rumblings recently, though today’s news comes from the Governor’s budget – different than what we saw in late 2024 from Michigan & Louisiana where more junior state politicians had proposed tax increases.

“We’ve discussed the risk of higher OSB taxes at length – while most recently in our recent Year Ahead, we expected that 2025 would bring higher volatility to digital gaming stocks especially given this ever present risk. On the land-based side, we were not expecting this – with MGM National Harbor bearing the brunt of impact.”

 

Rege Behe is lead contributor to CDC Gaming. He can be reached at rbehe@cdcgaming.com. Please follow @RegeBehe_exPTR on Twitter.