Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Monarch’s customers
Barry Jonas of Truist Securities September 22 commented on investor meetings his firm recently had with Monarch Casino & Resort. Jonas wrote that “MCRI’s consumer (was) more resilient. While the low-end U.S. consumer has been impacted by inflation, MCRI services a more affluent gaming customer (less impacted by the macro environment today). As one of the key macro indicators management looks at, unemployment rates in MCRI’s markets of Reno and Black Hawk/Denver remain relatively healthy.”
Caesars strategy
J.P Morgan’s Dan Politzer looked at options for Caesars. “For the past several years, Caesars has underperformed (compared to) peers, prompting questions as to what, if anything, management can do from a strategic standpoint to unlock value and improve the share price,” Politzer wrote. “With short interest at a 5-year high (14% of float) and the stock at a 5-yr low, we look at potential options as it relates to Caesars: (1) Spinning off its digital business; (2) going full OpCo (the “nuclear option”); or (3) staying the course and using its $3 billion net cash generation through year end 2027 (~60% of market cap) to pay down debt/repurchase stock. Our conclusion: Caesars should stay the course, as options (1) and (2) are neutral/dilutive to free cash flow/share and cap long-term equity upside. “
OSB outlook
David Katz of Jefferies, in a September 21 note, wrote that “our latest OSB survey focused on US in-play betting and prediction market trial. Results indicate strengthening trends around in-play betting, a tailwind for DraftKings given its focus on the segment, and Sportradar given it supplies the infrastructure needed. We also note parlays remain very popular, which favors the product mix of Flutter. Finally, prediction markets, while still new, have gained ~60% trial in the US.”
Sportradar looks good
Samuel Nielsen of J.P. Morgan on September 19 looked at Sportradar. “With Sportradar a meaningful outperformer year-to-date (+70% vs. digital peer average +32% and SPX +13%), we revisit our investment thesis and evaluate Sportradar’s key revenue drivers,” Nielsen wrote. “Net, we come away incrementally positive on Sportradar, as the stock provides exposure to digital gaming’s attractive secular growth but insulates investors from the earnings volatility and policy uncertainty associated with B2C online sports betting operators. We favor Sportradar for its strong earnings visibility and free cash flow conversion (55-60%), opportunity for meaningful cross-sell/up-sell potential to its existing customer base, and accelerating adoption of higher margin, in-play wagering markets.”
Genius acquisition
On September 18, David Bain of Texas Capital Securities wrote about Genius Sports. “This morning, Genius announced it has acquired Sports Innovation Lab, a company specializing in the collection of sports fan data. While no financial details were provided, checks cite a 100% cash transaction using a relatively small portion of Genius’ $220M+ cash/no debt balance sheet. The acquisition should be accretive to next year’s earnings, in-line with Genius’ previously stated M&A objectives, in our view. We believe Genius’ media business will further come into focus at its December 3, 2025, investor day, and Sports Innovation Lab further strengthens significant upside optionality for the underappreciated (in our opinion) segment.”
