Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
NeoGames
Truist Securities analyst Barry Jonas Nov. 17 weighed in on NeoGames third quarter earnings. “Management continues to execute ahead of Aristocrat closing the acquisition,” Jonas wrote. “While the stock’s ~8% spread over takeout price reflects uncertainty on the crisis in Israel/Gaza, we think the deal falling through would likely involve tail-risks. An April/May close (for ~20% annual return) seems possible (guidance is 1H:24), though would depend on timing of state gaming regulatory approvals. We remain Hold rated, though will continue to monitor the spread. No change to our PT at the $29.50 takeout price. We flow through the quarter but make no major changes to our forward EBITDA estimates.”
New Jersey and Pennsylvania October sports betting
J. P. Morgan analyst Joseph Greff last week examined October sports betting in New Jersey and Pennsylvania. Noting New Jersey’s sports betting revenue was $92.3 million on a handle of $1.30 billion (a year-over-year increase of 22%), Greff wrote, “Aggregate win rate for the month was 8.1%, up 31 basis points year-over-year and compares to a ~7% average for the full-year 2022, calculated as win vs. handle on completed events. In terms of market share for the top four operators we estimate FanDuel at $57.2 million (62% share), followed by DraftKings at $14.7 million (16% share), BetMGM at $7.8 million (8% share), and Caesars at $1.4 million (1% share).
“For Pennsylvania, which posted a sports betting handle of $829 million, up 4% year-over-year, with revenues of $48.2 million, (up 19% year-over-year) and $73.6m on a gross basis (up 20% year-over-year), Greff wrote that implied “gross hold of 8.9% (up 116 basis points year-over-year). From a handle market share standpoint, FanDuel led with 40% share, followed by DraftKings at 31%, Rush Street at 7%, MGM at 6%, and Caesars at 5%.”
DraftKings’s Investor Day
Writing Nov. 19 about DraftKings’s virtual Investor Day, Jefferies equity analyst David Katz wrote the event “focused on the longer-term growth expectation for the digital market and DraftKings’ position within it. Management highlighted the speed at which states are growing larger and faster than previously anticipated, now expecting the online sports betting and iGaming total addressable market to grow from ~$20 billion in 2023 to ~$30 billion in 2028 solely by way of existing states, with the longer-term revenue guidance implying 24% share, which we consider reasonable. This total addressable market estimate compares with our $35 billion by 2030 including larger states yet to legalize, California, Texas, Florida.”
