Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Taxes on sports betting could dampen growth
Fitch Ratings June 16 issued a note regarding recent and proposed sports betting tax hikes, noting they could “dampen the online gaming sector’s positive growth momentum but is unlikely to affect the ratings for online gaming operators DraftKings (BB+/Stable) and Flutter Entertainment (Flutter, FanDuel, BBB-/Stable). The ratings continue to reflect the sector’s strong growth prospects, conservative financial structures and robust free cash flow profile. These factors are balanced against the highly competitive nature of the market and an evolving policy landscape.”
BetMGM increases revenue guidance
David Katz of Jefferies June 22 looked at BetMGM’s prospects, writing that the company had “increased its FY25 net revenue guidance to at least $2.6 billion (from the previous range of $2.4-2.5 billion) and stated that FY25 EBITDA is now expected to be at least $100 million (prior guide EBITDA positive). MGM’s commentary this past week reiterated the digital optimism. Commentary specifically noted improvements in tech capabilities positioned for the NFL season. Additional updates are expected with the first half update on July 29th.”
Lodging trends soft
Truist Securities’ C. Patrick Scholes June 18 commented on lodging trends.
“Last week’s results were unsurprisingly soft (to us), reflecting the combination of volatility in consumer and business confidences, government segment cutbacks, and diminished in-bound international travel (and to these headwinds we now add student loan debt repayments – likely impacting limited-service hotels) all manifesting in soft domestic demand trends,” Scholes wrote. “Additionally, group occupancy was weak, down 3.5% year-over-year, a reflection of continued group attrition.”
Regional properties outlook
Jefferies’ Katz also looked at regional properties June 20.
“The primary focus for regional-exposed names (MGM Resorts, Caesars, Churchill Downs, Penn Entertainment) was strong May GGR data, which benefited from an extra Saturday, but also seemed to reflect otherwise fundamental drivers,” Katz wrote. “Consensus commentary suggested hesitancy to call HSD GGR growth a trend, given macro/geopolitical uncertainty. Meanwhile, commentary on the summer downside in Las Vegas is less than feared. Churchill Downs remains a top pick given its growth avenues, although MGM Resorts, Caesars, and Penn Entertainment are positively set-up.”
