Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Penn Entertainment outlook
J.P. Morgan analyst Joseph Greff looked at prospects for Penn Entertainment in a January 23 statement:
“We are raising our 4Q24 land-based casino EBITDAR estimates on the back of a stronger than expected quarter for the regional gaming operators,” Greff wrote, “with state reported gross gaming revenue data indicating solid demand since the election (as well as good demand before the election as October was a strong month), which partially offsets our lower interactive EBITDA estimates as a result of (well known) unfavorable sports outcomes in the month of December.
“For Penn’s regional segments, we estimate that GGR was up 3% year over year in the 4Q24, versus a 2% decline in the 3Q24, flattish growth in the 2Q24, and a 4% decline in the 1Q24. From a monthly perspective, we estimate Penn’s regional GGR was up 5% year-over-year in October, up 9% in November, and down 3.5% in December, though we note a less favorable December calendar comparison (two fewer weekend days year-over-year) and ongoing construction disruption in certain markets.”
Regulatory landscape for igaming
On January 26, Jefferies analyst David Katz looked at the regulatory landscape in the United States and how it can act as a catalyst for igaming:
“As expected, the first half of the year brings legislative debates in several states that are relevant for the U.S. market,” Katz wrote. “Massachusetts is debating legalization of igaming, with the three land-based operators having two licenses each plus four other independent operators receiving direct licenses. The proposed tax rate is 20% and the license fee is $5 million, which are reasonable. There is no indication yet whether the governor is supportive.
“This adds to ongoing efforts to legalize igaming in Indiana, Maryland and Wyoming, while a Virgina bill appears to have stalled. More importantly, the Texas conversation of legalization of land-based casinos and OSB has restarted with apparent public support, although Lt. Gov Dan Patrick continues to oppose any legalization and, according to our checks in the state, continues to control the Senate, suggesting meaningful progress is unlikely.”
Boyd’s prospects
J. P. Morgan’s Greff also looked at Boyd:
“We are tweaking our 4Q24 EBITDAR estimates to reflect a stronger than expected quarter for the regional gaming operators,” Greff wrote on January 23, “with state reported gross gaming revenue data indicating solid demand since the election (as well as good demand before the election as October was a strong month), offsetting softer-than-expected Downtown Las Vegas market-wide GGR trends, and unfavorable market-wide online sports betting hold rates (which impacts Boyd’s online segment dollars from its market access partnership agreements).
“For Boyd’s Midwest & South segment, we estimate that GGR was up 5% year over year in the 4Q24, versus a 2% increase in the 3Q24, a 1% increase in the 2Q24, and a 1% decline in the 1Q24. From a monthly perspective, we estimate Boyd’s Midwest & South GGR was up 4.5% year over year in October, up 12% in November, and up 13% in December, though we note a less favorable December calendar comparison (two fewer weekend days year-over-year).”
Online sports betting rankings
Jefferies’ Katz looked at online sports betting on January 22:
“Following a very quiet November, there was no movement in our overall rankings in December, as FanDuel and DraftKings remained the top two operators, followed by BetMGM, Bet365 and ESPN Bet. Spots 5-10 also showed no change month-over-month.
“FanDuel again maintained its top spot in all three of our primary metrics: Google Search Interest, Web Traffic Visits and Webpage Visit Duration, marking the third consecutive month of a #1 ranking in each category. Likewise, DraftKings again took the #2 spot in each category, while BetMGM was again #3 in Web Traffic and Webpage Visit Duration and #4 in Google Search Interest, behind Hard Rock.”
