Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
New York sports betting
Analyst Joseph Greff of J. P. Morgan, in a Nov. 27 statement about sports betting in New York for the week ending Nov. 18, wrote, “The New York Gaming Commission reported total weekly online sports betting gross gaming revenue of $40.7 million, down 1% year over year on handle of $529 million, up 54%, implying a market-wide win rate of 7.7% (down 430 basis points year over year). NFL season-to-date gross revenue is up 14%, while handle is up 36%, implying an 8.7% win rate for the period (down 170 basis points year-over-year).”
Greff reported that Fan Duel’s handle of $262 million “was up 82% year-over-year, and gross gaming revenue of $18.4 million was down 16%, implying a hold rate of 7.0% (down basis points year-over-year).
“DraftKings handle of $154 million was up 42% year-over-year, and gross gaming revenue of $14.2 million was up 20%, implying a hold rate of 9.2% (down 170 basis points year over year). Caesars handle of $46 million was up 5% year-over-year, and gross gaming revenue of $4.3 million was down 10%, implying a hold rate of 9.3% (down 160 basis points year over year).”
BetMGM’s “handle of $32 million was up 31% year-over-year, and gross gaming revenue of $2.2 million was up 62%, implying a hold rate of 7.0% (up 130 basis points year over year).”
AGS
In a Nov. 27 note, Truist Securities analyst Barry Jonas wrote of an investor lunch with AGS senior vice president investor relations and corporate operations Bad Boyer. “AGS is focused on continuing execution and very positive on its positioning following a 3-year strategic transformation,” Jonas wrote. “We think the stock’s post-Q3 sell-off was largely a function of liquidity and trading mechanics, but also highlighted buyside expectations into the print. We see AGS as a high conviction name with strong organic growth, deleverage, FCF generation and M&A optionality. We see compelling risk/reward here at just ~4.6x 2024E EV/EBITDA.”
Labor issues
Equity analyst David Katz of Jefferies reflected on labor deals with workers in Las Vegas and Detroit. “Caesars Entertainment workers under Culinary Local 26 voted 99% in favor of ratifying the new five-year contract, which would include a 10% immediate wage increase and 32% increase over its life,” Katz wrote. “The deal also protects workers from technology developments that might replace their jobs, such as AI-powered opportunities, and lower workloads. Meanwhile, in Detroit on Nov. 22, Motor City and Greektown workers approved a new deal while MGM Grand workers voted to remain on strike. The impact has shown up in results, with gross gaming revenue down 19% in October and expecting November should be impacted at least as much. This is a notable challenge for MGM.”
