Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
NFL wagering results positive
Macquarie’s Chad Beynon on September 24 looked at the landscape of NFL wagering.
“With NFL hold rates gaining some momentum, we reiterate DraftKings/Flutter as top online picks with business models most levered to NFL hold rates as we head into the all-important and seasonally high 4Q. We continue to rank online as a top gaming sector and view any pullback as a long-term buying opportunity. For investors seeking alternative exposures to traditional North America online gaming, we highlight Super Group as a disciplined and experienced operator that we believe is uniquely positioned to capture the global secular trends of gaming digitization and legalization given its 40% exposure to Africa and significant exposure to icasino, while trading at a discount rate to digital peers.
Bids for New York casinos imminent
David Katz of Jefferies on September 28 looked at bids for casinos in New York.
“This week MGM’s Empire City and Resorts World received committee approval to advance to State review for the three licenses scheduled to be awarded in December,” Katz wrote. “The other three applicants in contention have their committee votes September 29 for Bally’s Bronx and the Coney Island project, and Tuesday for Hard Rock’s Metro Park. Our view throughout is the applications MGM (~$2.3 billion project cost), Resorts World (~$5.5 billion) are the most logical choices given their incumbency as racinos and Hard Rock (~$8.1 billion) as the third, given the location and brand strength.
Las Vegas Strip revenue details
Barry Jonas, Truist Securities on September 26 reported that August Las Vegas Strip gross gaming revenue was up 5.5% year-over-year “largely on high table and baccarat hold (offsetting softer handle for both). Normalized GGR was down 1% year-over-year The calendar was slightly favorable (extra Sunday year-over-year) but offset by the unfavorable Nevada slot accounting (-1 day). Locals revenue remains resilient up 3% year-over-year though also benefiting from hold (normalized -7% year-over-year). Visitation metrics and Strip revenue per available room are still soft (-7%/-11%), along with lower convention attendance (-8% year-over-year). Summer visitation woes continue but a November/Q4 inflection is possible.
DraftKings rating
On September 26, J.P. Morgan’s Dan Politzer wrote of a meeting his firm hosted DraftKings Chief Financial Officer Alan Ellingson and Senior Director of IR Michael Delalio. Key takeaways: “(1) Three weeks into NFL, DraftKings is thrilled with its product, engagement levels, and increasing parlay mix/structural hold. (2) Hold has been volatile (i.e., NFL week 1), but DraftKings is highly confident in its pricing. (3) DraftKings has seen zero impact from prediction markets, and remains in “wait and see” mode on expanding there. (4) DraftKings expects to generate strong free cash flow, with share repo the primary use.
“We reaffirm our overweight rating and are increasingly encouraged by DraftKings’s ongoing improvement in user monetization.”
