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: Genius Sports (GENI) announced a strategic partnership with the Canadian Football League, or CFL, the second largest football league globally with over 100 years of history. Genius Sports will provide a range of technology and services that will enable the CFL to "engage new audiences around the world." As part of the agreement, Genius Sports will have the exclusive rights to commercialize the CFL's official data worldwide and video content with sportsbooks in international markets, replicating the distribution of its official betting products for the EPL and NFL, among others. In connection with the partnership, in addition to the official data rights agreement, Genius Sports and the CFL have also agreed that Genius Sports will acquire a minority stake in CFL Ventures, the new commercial arm of the league, allowing the company to benefit strategically and financially from the CFL's growth. The transaction is expected to become effective in January 2022.
Wynn Resorts (WYNN) announced it will appoint Julie Cameron-Doe as its chief financial officer, effective in the second quarter of 2022 on completion of her notice period with her current employer. Ms. Cameron-Doe will succeed Craig Billings, who will become the company's CEO early next year.
The NFL Players Association, DraftKings (DKNG) and OneTeam Partners revealed plans to launch gamified NFT collections that will debut on DraftKings Marketplace during the 2022-2023 NFL season. The agreement grants DraftKings licensing rights for active NFL players, including the authentic use of name, image and likeness. This marks the debut integration of gamified NFTs by the athlete union. Initial anticipated features of DraftKings' gamified NFL player NFTs include the ability for customers to use these collectibles within games against others on the platform as well as separate buying and selling functionality. It is expected there will be a variety of NFT editions and tiers that incorporate different aspects of utility and digital scarcity, all powered by Polygon. DraftKings previously announced a strategic agreement with Polygon to provide a scalable, eco-friendly blockchain solution that enables added throughput, lower transaction fees and expanded capabilities.
RECORD MONTH IN ILLINOIS: Illinois set a new record with a reported total October handle of $840.4M, exceeding the previous monthly record of $627.6M set in March of by 34%. Illinois is the sixth biggest state. Benchmark analyst Mike Hickey said Illinois is considered a limited license state and operates an in-person registration scheme that has likely confined the total addressable market. Illinois reported total handle per adult is about 65% of New Jersey's comparable per adult October result, according to Hickey. The analyst told investors that the state's market share winners include DraftKings, FanDuel, and Rush Street Interactive (RSI).
AND WE'RE OFF: Jeff Barker of the Baltimore Sun reported that Governor Larry Hogan placed the first legal sports bet in Maryland on Thursday. He bet on two teams that play in the state, the Ravens and the Washington Football Team, to clash in the Super Bowl. Hogan made the bet at MGM National Harbor (MGM), the first Maryland casino to open sports betting following approval by state regulators. Horseshoe Casino Baltimore and Live! Casino & Hotel Maryland both launched their sportsbooks today bringing the total of approved locations to seven. The sports betting industry is projected to bring in roughly $100M annually when fully operational, $15M of which will go towards education. Notably, 15% of the gross revenue from sports wagering will to the state.
OHIO BILL IN HANDS OF GOVERNOR: The Ohio legislature passed HB 29 Wednesday afternoon clearing a path for sports betting in Ohio to start by January 1, 2023. According to Matthew Waters of Legal Sports Report, the work went quickly for HB 29 after a close to four-hour delay. Reportedly, the conference committee favorably reported the bill in under five minutes and it took fewer than 10 minutes to accept the conference report on the Senate floor. The House passed the bill on Wednesday. Now the bill is on the desk of Governor Mike DeWine, who is publicly in favor of legalizing Ohio sportsbooks. Some amendments to the bill include:
ANALYST COMMENTARY: UBS analyst Louise Wiseur initiated coverage of Flutter Entertainment (PDYPY) with a Buy rating and 16,200 GBp price target. The analyst thinks the shares "are now ignoring" the company's "significant growth opportunities ahead."
CBRE analyst John DeCree initiated coverage of Flutter with a Buy rating and 16,000 GBp price target. Union Gaming was acquired by CBRE in June. The recent selloff in global gaming equities "created a number of great opportunities to get involved in the sector at some of the most attractive levels in months," DeCree tells investors in a research note. In spite of the omicron variant, the analyst remains bullish on the domestic casino recovery, particularly in Las Vegas. He also remains optimistic on the global digital gaming industry, with a "strong emphasis" on the U.S. sports betting and internet gaming opportunity. DeCree said the favorable backdrop for the U.S. gaming industry gives him even more reason to "remain enthusiastic" for casino real estate and the gaming real estate investment trusts. The analyst remains "guarded" on the outlook in Macau citing the uncertainty regarding concessions, junkets, and reopening. DeCree initiated coverage of DraftKings with a Hold rating and $36 price target.
CBRE's DeCree resumed coverage of Wynn Resorts with a Buy rating and $120 price target and resumed coverage of Las Vegas Sands (LVS) with a Hold rating and $42 price target. The analyst noted that he sees value in the shares of Wynn as a special situation and contrarian play. DeCree told investors in a research note that many investors are overly focused on Macau and the company's VIP exposure that they are overlooking the considerable value of the "best-in-class, generational" assets built by Steve Wynn. He concluded that newly-promoted CEO Craig Billings will have "plenty of levers at his disposal" to unlock value while waiting for a broader reopening and recovery in Macau.
DeCree also resumed coverage of Penn National (PENN) with a Hold rating, MGM Resorts with a Buy rating and $56 price target and Caesars (CZR) with a Buy rating and $150 price target. DeCree remains optimistic on the global digital gaming industry, with an emphasis on the U.S. Sports Betting and iGaming opportunity. He believes there is still significant underappreciated value in both Caesars and MGM,
Goldman Sachs analyst Stephen Grambling downgraded Accel Entertainment (ACEL) to Neutral from Buy with a price target of $14.50, down from $15.50. The analyst remains positive on the company's near term fundamentals but believes its longer-term growth opportunity faces risks from slower legalization of video lottery terminals and its plans for a new integrated resort in Chicago. Grambling cites the stock's recent outperformance and potential for incremental competition for the downgrade.
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) and Wynn Resorts (WYNN).