Ohio bill experiences changes, Tennessee surpasses $1B mark, and other notable stories in the sports betting and iGaming space
Welcome to the latest edition of "Bet On It," where The Fly looks at news and activity in the sports betting and iGaming space.
SECTOR NEWS: Penn National (PENN) announced that the Indiana Gaming Commission has approved the company's application to offer online sports wagering in Indiana. Penn National plans to launch its Barstool Sportsbook mobile app on iOS and android, as well as for desktop users, at 10:00 a.m. CST on May 18, pending any final regulatory approvals. "Once live, Indiana will become the company's fourth online sports betting market, following previously successful launches in Pennsylvania, Michigan, and Illinois," Penn National says.
With the number of people getting vaccinated increasing and new guidance from the CDC, venues are peeling back capacity and mask restrictions. MGM Resorts (MGM) announced that the Nevada Gaming Control Board has approved a return to 100% occupancy and no social distancing on the gaming floors located inside the company's Las Vegas Strip properties. The waiver was granted based on MGM Resorts' work to vaccinate its workforce and applies only to gaming floors. Current 80% occupancy restrictions and three-feet social distancing policies remain in effect outside of the gaming floors, including at restaurants, pools and other non-gaming areas and activities. Additional health and safety protocols will continue, including applicable mask mandates, based on regulatory requirements and expert guidance. Also, Wynn Las Vegas and Encore will communicate to guests that they are not required to wear a mask if they are fully vaccinated and are required to wear a mask if they are not. The resort trusts guests to take the appropriate precautions based on their personal vaccination status. Likewise, company employees will follow a similar policy. The company currently has a vaccination rate of 91% among its employees in Las Vegas and as a result, was granted permission by the Nevada Gaming Control Board to amend its occupancy and physical distancing requirements. Effective May 10, the gaming areas at both Wynn and Encore were permitted to run at 100% occupancy and plexiglass dividers were removed from all table games and slot machines.
Flutter Entertainment (PDYPY) announced that Matt King, CEO of FanDuel, has given notice of his intention to leave the company. During his 4 years as CEO, King has overseen the transformation of the business from online daily fantasy sports operator to the market leader in US online sports betting and gaming. King has agreed to remain with FanDuel while a search process is undertaken to appoint his successor. The company added, "As previously announced, the Flutter Board has been assessing the potential merits of listing a small stake in FanDuel in the U.S. Whilst Matt's departure will affect the timing of any potential US listing, the Board will continue to keep this option under review."
Wynn Resorts (WYNN) and Austerlitz Acquisition Corporation I (AUS) announced last night that they have entered into a definitive agreement under which Austerlitz I will combine with Wynn Interactive, a subsidiary of Wynn Resorts, to create an independent public company. Upon closing of the proposed transaction, the combined company will retain the "Wynn Interactive name and relist its shares on the Nasdaq Stock Exchange under the new ticker symbol "WBET." The combined company is expected to have an enterprise value of approximately $3.2B at closing, representing 4.5x Wynn Interactive's projected 2023 revenue. Cannae Holdings. has agreed to fully backstop share redemptions, assuring availability of cash proceeds at closing. As a result, irrespective of share redemptions by the public stockholders of Austerlitz I, approximately $640M in cash will be available to fund the combined Company's operations and support new and existing growth initiatives of Wynn Interactive. Upon closing of the transaction, assuming no share redemptions by the public stockholders of Austerlitz I, Wynn Interactive's current shareholders will retain an equity interest in the company of approximately 79%, inclusive of 58% equity interest by Wynn Resorts, Ltd., Austerlitz I's stockholders will hold approximately 18% and Austerlitz I's sponsor will hold approximately 3%. The proposed business combination, which has been unanimously approved by the boards of directors. Morgan Stanley analyst Thomas Allen raised the firm's price target on Wynn Resorts to $145 from $140 and maintained an Overweight rating on the shares as he believes the merger will provide it with capital "to compete more effectively," Allen said. Wynn's SPAC merger increases his confidence in the sports betting and iGaming business, which he now values at $11 per share, up from $4 per share previously, Allen noted.
Churchill Downs (CHDN) said Sunday it will invalidate Medina Spirit's recent Kentucky Derby victory if it's confirmed that the champion horse failed a drug test. Runner-up Mandaloun will be declared the winner if the finding of Medina Spirit's test is upheld. Churchill Downs also suspended Medina Spirit's trainer, Bob Baffert, from entering horses to compete at its racetrack.
EARNINGS: Some notable companies to report earnings this week in the sports betting and iGaming space include Scientific Games (SGMS), Bally's (BALY), Accel Entertainment (ACEL) and Wynn Resorts.
Scientific Games' Q1 report came in above analyst expectations, with Lottery revenue increasing 17% compared to the prior year driven by record U.S. instant game sales, large Powerball and Mega Millions jackpots as well as strength in Europe. The company noted Gaming revenue of $244M was impacted by COVID-19 restrictions for casinos globally, but AEBITDA in the segment grew 13%. Gaming Operations revenue declined 5% from the prior year as casino capacity restrictions persisted. Bally's adjusted EPS came in below consensus, but its Q1 revenue came in above by $20M.
George Papanier, president and CEO of Bally's, said, "This was a remarkable first quarter for Bally's. As COVID-19 vaccinations rolled out, and capacity restrictions and other protocols loosened, we experienced a strong rebound in demand that led to a significant increase in visitation. As a result, we achieved record Adjusted EBITDA and continued margin expansion. As we approach historical operating levels, we are encouraged by the performance at many of our properties this quarter, which when coupled with ongoing capital initiatives, offer tremendous growth opportunities and the potential to deliver strong results over the coming quarters."
Similarly to Bally's, Accel entertainment experienced a miss on the bottom line, but a beat on the top line in Q1. The company reported Q1 same-store sales growth of 34% and noted March was the highest revenue month in Accel's history. Lastly, Wynn resorts missed on expectations in the first quarter. However, the company pointed to strength in the casino segment and Las Vegas operations as positives in Q1.
CHANGES TO OHIO BILL: The Senate co-sponsors of the proposed Ohio sports betting legislation introduced the bill Wednesday with a few changes, Matthew Waters of Legal Sports Report noted. Anyone who wants to offer mobile betting in the state of Ohio must "bank the bet." As explained to LSR, that means accept the risk for the bet. So there can be as many mobile betting skins under one licensee as desire, but the bet must come back to the licensee no matter the platform, according to the changes. Additionally, the part of the bill that included first-come, first-served licenses was removed. For now SB 176 is the sole Ohio sports betting proposal, but it will not stay that way for long Waters reported. Ohio Representative Brigid Kelly told LSR, “It’s still a work in progress. There was a lot of work that had been done. I think [last year’s bill] laid a good foundation but certainly, when you get new people involved in the mix, you know, it’s different perspectives, new conversations. So we’re still working on it.”
VOLUNTEER STATE HITS $1B: Tennessee sportsbooks collected over $1B in wagers in their first six months, beating out every other state to the $1B milestone. Cassandra Stephenson of the Tennessean reported that the state's seven operating sportsbooks - BetMGM, FanDuel, DraftKings (DKNG), Action 24/7, WynnBET, William Hill (WIMHY) and TwinSpires - brought in $172.4M in gross wagers in April, citing officials during a Sports Wagering Advisory Council meeting. The $1B mark was reached in just six months after the industry's launch during the NFL season, coming in ahead of New Jersey's previous record of seventh months. Notably, Tennessee is the only state to restrict sports gambling strictly to online platforms.
PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally's (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn National (PENN), Rush Street Interactive (RSI), Scientific Games (SGMS), Score Media (SCR), William Hill (WIMHY), and Wynn Resorts (WYNN).