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: Nevada Governor Steve Sisolak announced he will ease COVID-19 restrictions established in November that limited casino capacity to 25%, the Reno Gazette Journal's Ed Komenda reported, citing Sisolak. On February 15, gaming floors will be able to increase capacity to 35% and on March 15, businesses operating at 35% will be able to move to 50% capacity.
MGM Resorts (MGM) reported Q4 earnings on Wednesday with adjusted losses per share coming in at (90c), matching Street estimates, and revenue coming in a hair below expectations. Despite the company sharing its confidence in the long-term recovery of Las Vegas and Macau, shares were down 2% following the earnings announcement. Stifel analyst Steven Wieczynski raised the firm's price target on MGM Resorts to $40 from $34 as he now ascribes about $6.50 per share in value for the company's 50% ownership of BetMGM, telling investors that "if you didn't think sports betting/iGaming are very, very important right now to gaming companies, just go back and listen to tonight's MGM conference call." Given his view that investors continue to have "lofty expectations around the future of sports betting/iGaming," Wieczynski believes MGM shares can grind higher as their BetMGM platform is performing well. However, he reiterated a Hold rating on the shares as he still has a cautious stance around MGM and other Las Vegas-centric operators on the belief that a return to normal within the group/convention business "will be a long road ahead."
Craig-Hallum analyst Ryan Sigdahl continues to believe Scientific Games' (SGMS) digital segment is "underappreciated" by investors, he told investors in a note this week. On Sunday, the company "flawlessly" processed sports betting wagers before and during the Super Bowl for key customers and in the U.K., while other sportsbooks including DraftKings (DKNG), Fanduel (PDYPY), Rush Street Interactive (RSI) and Barstool (PENN) experienced notable tech outages, Sigdahl said. The analyst maintained a Buy rating and a $60 price target on Scientific Games' shares, but sees potential for the stock to rise to $100-plus.
DON'T MESS WITH TEXAS: While other states have raced to legalize sports betting, Texas potentially might not follow suit, Houston Chronicle reported. Lieutenant Governor Dan Patrick told a radio host on Tuesday that he just doesn't see support for the idea in the Texas Senate, which he presides over, or among Republican voters. Patrick is quoted as having said, "We are nowhere close to having the votes for it, we don't even have a bill that has been filed in the Senate on this issue, without a sponsor, I don't think about it. I don't spend much time on it because the members are just against it." Following, Patrick's comments, Morgan Stanley analyst Thomas Allen noted that Republicans have control of the state senate, which in his view means the likely chances of Texas legalizing this year are "now slim." If sports betting is not passed this year, the earliest it could be legalized in Texas would be 2023 due to the state's biennial legislative calendar, noted Allen, who noted that while Texas not legalizing this year would be "disappointing" he still sees about 10 other states that are "well positioned" to legalize sports betting.
Roth analyst David Bain told investors in a research note that while likely slightly negative for online sports wagering company momentum and a potential small disappointment to Las Vegas Sands (LVS) given recent commentary citing its potential desire to expand there, Patrick's comments should be positive for Everi Holdings (EVRI) and PlayAGS (AGS). Bain said, "Again, while we believe any actual impact of TX gaming land-based expansion would likely be more benign than its headline risk, Patrick's comments seemingly put an end (or at least push back) recent investor discussions of increased Oklahoma risk to both diversifying companies - even if actual risk was multiple years out with little clarity on potential outside feeder disruption to any of the large gaming tribes in Oklahoma."
HAWAII BILL FACES OBJECTIONS: Several gambling bills were discussed this week during a Hawaii House Economic Development Committee meeting, with good amount of vocal opposition, Pat Evans of Legal Sports Report reported. While HB 736 was deferred, committee chair Rep. Sean Quinlan was supportive of the bill that proposes a sports betting pilot program in Hawaii. “I feel more comfortable with [it over the other gambling bills,]” Quinlan said. “It’s something we really need to look at. With the ubiquity of cell phones, I would like to see the state get its fair share.” DraftKings government affairs manager Rebecca London also spoke in favor of the bill, citing American Gaming Association estimates there are 276,000 Hawaiians illegally betting up to $669M per year. Deputy Prosecutor Tricia Nakamatsu spoke against the bill on behalf of the Honolulu Prosecuting Attorney’s office. Nakamatsu pointed to various studies that found legalized gambling comes with increased rates of crime. “Once you open this Pandora’s box to legalized commercial gambling … the evidence is very clear [crime] will be way worse,” Nakamatsu is reported to have said.
PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Bally's (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (PDYPY), Gan Limited (GAN), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn National (PENN), Rush Street Interactive (RSI), Scientific Games (SGMS), William Hill (WIMHY) and Wynn Resorts (WYNN).
Wynn Resorts
+2.89 (+2.52%)
MGM Resorts
+0.41 (+1.16%)
Scientific Games
+2.25 (+4.97%)
DraftKings
+1.76 (+2.97%)
Use FLUT
+ (+0.00%)
Rush Street Interactive
-0.15 (-0.76%)
Penn Entertainment
+5.83 (+5.18%)
Las Vegas Sands
+1.05 (+1.91%)
Everi Holdings
+0.775 (+5.48%)
PlayAGS
+0.13 (+2.06%)
Bally's
+1.61 (+2.79%)
Boyd Gaming
+0.37 (+0.69%)
Caesars
+1.57 (+2.00%)
Churchill Downs
+6.22 (+2.97%)
Gan Limited
+1.07 (+3.65%)
William Hill
+ (+0.00%)