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: FanDuel Group, a subsidiary of Flutter Entertainment (PDYPY), announced it is launching its mobile sportsbook and its online horse racing and advanced deposit wagering platform, TVG, in Arizona today. "In addition, the company will officially welcome Arizona sports fans to its brand-new retail FanDuel Sportsbook lounge located inside the Footprint Center - home of the Phoenix Suns. The retail sportsbook is the first of its kind to be located inside an NBA arena, bringing added excitement to Suns games and downtown Phoenix year-round. The legalized launch of mobile sports wagering in Arizona comes on the heels of FanDuel launching its daily fantasy sports product in the state on August 28," the company stated. DraftKings (DKNG) also launched its online Sportsbook in Arizona, marking the 14th state in which the mobile sportsbook is available. Arizona sports fans age 21 and over are now able to place wagers on a variety of betting markets across professional, collegiate and other sports leagues via the Sportsbook app.
Caesars (CZR) announced an agreement to sell the non-US assets of William Hill to 888 Holdings (EIHDF) for approximately GBP 2.2B. After the repayment of debt and other working capital adjustments, Caesars expects to receive net proceeds from the transaction of approximately GBP 835M or $1.2B. The transaction is subject to receipt of the approval of shareholders of 888 Holdings and regulatory approvals. Caesars' expectation is that the transaction should close during Q1 of 2022.
BetMGM (MGM) announced a partnership with TAPPP to make BetMGM gift cards available at major convenience and grocery retail chains in select U.S. states offering legal sports betting. BetMGM gift cards are now available in $25 and $50 denominations in eight states at over 6,000 locations across the U.S.
NFL SEASON KICKS OFF: With the NFL returning on Thursday night in the first game of the season, the slow period of summer is officially over for sportsbooks and online gaming companies. The American Gaming Association’s annual national survey of Americans’ NFL betting plans showed that a record 45.2M Americans will wager on the 2021 NFL Season, up 36% from the 2020 NFL season. While NFL betting is projected to be up across all wagering methods, betting with online sportsbooks is expected to see the largest increase over 2020 while illegal bookies are expected to see the slowest growth. The AGA laid out the following:
Macquarie Capital analyst Chad Beynon highlighted some things for investors to look forward to. He told investors in a research note that iGaming names have rallied during the last month, and he expects this to continue as investors become more comfortable with upcoming revenue estimates given aggressive marketing, superior product and overall better media/betting integration. The analyst noted that while there will be market share shifts given an expanding field of players, confirmation of a growing total addressable market is the "most important" driver of the group. Features such as in-play betting, microbetting and same game parlays could be a positive surprise, in our view. Beynon estimates that football accounts for 35%-40% of the annual revenues for online gaming companies, although most of this comes in Q4. While the NFL season is considered a major catalyst for the group, geographical expansion has been a cause for changes in the model. Macquarie is now assuming a Q4 sports betting launch for Louisiana and Connecticut. Beynon concluded with the assumption that Washington, Wyoming, Arizona, Maryland and South Dakota could go live with sports betting later this year.
COMPETITION HEATING UP: Jeffries analyst James Wheatcroft observed the top four former sportsbooks holding their respective rankings in August. The analyst said, "DraftKings remained the first, very closely followed by FanDuel, which is consistent with our thesis of superior technology and first mover advantage. Meanwhile, Bet365 remained in 3rd place, followed by BetMGM (MGM). Note that BetMGM was the first in terms of momentum score on social fan growth. Both Barstool (PENN) and TheScore (SCR) saw an increase in their rankings, potentially attributed to increased attention from the announced merger. TheScore also jumped in the momentum score rank from 9th to 4th as they saw social footprint growing over the past month." Wheatcroft's favored names include DraftKings, Flutter Entertainment, MGM, Entain (GMVHF), Caesars, and Rush Street Interactive (RSI). He told investors that he expects DraftKings and FanDuel to retain over 20% market share each. The analyst concluded that BetMGM has "demonstrated very strong momentum and solid market share, supporting our thesis for MGM and ENT." He added that while the Caesars's and William Hill brands have yet to reflect meaningful market share, he expects better amid the rollout and marketing efforts in Q3 around the NFL season and better utilizes the media partnership with ESPN and CBS. He also remains "constructive" on iGaming-focused operator Rush Street, where he thinks "superior economics and higher margins will likely lead to strong returns in out years."
BUSY WEEK FOR GENIUS SPORTS: As business for companies in the sports betting space pick up, Genius Sports (GENI) had a notably busy week. On Tuesday, the company signed agreements with both Caesars and WynnBet, the sports betting app from Wynn Resorts (WYNN). Caesars' portfolio of casinos, sportsbooks and wagering entities will have access to Genius Sports' entire official sports data content offering, including customer acquisition tools, and fan engagement solutions. Genius Sports also announced an expansion of its existing supplier agreement with WynnBET to provide NFL official sportsbook data, content and fan engagement solutions.
On Wednesday, Genius Sports reported Q2 earnings and tightened its FY21 revenue view to $255M-$260M from $250M-$260M. Shortly after, the company disclosed that it has been granted a Temporary Event Wagering Supplier license by the Arizona Department of Gaming. With the addition of Arizona, Genius Sports is now authorized to operate in 16 U.S. states. Also on Wednesday, the company secured a new partnership with 888 Holdings, an online betting and gaming company, to provide its official data and trading capabilities for SI Sportsbook. Genius Sports will provide pre-game and in-play content across U.S. sports properties including the NBA, NCAA, NASCAR and NFL. The agreement makes SI Sportsbook, which has launched in Colorado, the latest U.S. sports betting brand to adopt Genius Sports' exclusive full suite of NASCAR's official data-powered in-race betting markets, launched in partnership with Genius Sports in 2020. SI Sportsbook will also offer NFL official sports data, which includes access to the league's real-time statistics, proprietary Next Gen Stats and official sports betting data feed. Wheatcroft said the lackluster 888 share price reaction is as odds with a well-flagged, transformational deal, in our view. He told investors that the 888 deal to acquire William Hill's International was highly attractive, with both material EPS accretion and re-rating scope. Wheatcroft called the headline valuation favorable, before factoring in the material cost synergies. Maybe the long period until completion is off-putting, we see that as an enhanced buying opportunity, he told investors.
However, Genius Sports was not done in terms of partnerships this week. Genius Sports entered into a long-term partnership with Penn Interactive to provide official data and fan engagement solutions for the company's Barstool Sportsbook. Penn Interactive currently operates online Barstool Sportsbooks across nine U.S. states, including Pennsylvania, Michigan, Illinois and New Jersey. Genius Sports will provide Barstool Sportsbook with its official data, including access to select official sports data from the U.S. and international sports leagues. Across player acquisition, engagement and long-term retention, Barstool Sportsbook has also partnered with Genius Sports for its marketing and engagement strategy.
On Thursday, B. Riley analyst David Bain resumed coverage of Genius Sports with a Buy rating and $32 price target. The company's "established and augmenting" market position captures online sports book total addressable market increases, Bain told investors in a research note. While he values Genius similarly to other business-to-business online gaming companies, he believes the company's technology and online, operational integration with the sports industry could "eventually unleash" valuation multiples akin to software-as-a-service companies, offering "significant potential upside."
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).
Use FLUT
-0.08 (-0.08%)
DraftKings
-1.14 (-1.79%)
Caesars
-1.53 (-1.44%)
MGM Resorts
-0.26 (-0.61%)
Penn Entertainment
-3.8 (-4.53%)
Score Media
-0.79 (-2.22%)
Entain
+ (+0.00%)
Rush Street Interactive
+0.235 (+1.49%)
Genius Sports
+0.315 (+1.42%)
Wynn Resorts
-2.08 (-2.00%)
Accel Entertainment
-0.06 (-0.52%)
Bally's
-0.85 (-1.76%)
Boyd Gaming
-1.83 (-2.98%)
Churchill Downs
-1.82 (-0.82%)
Gan Limited
-0.45 (-2.70%)
Las Vegas Sands
-1.62 (-3.71%)
Scientific Games
-1.66 (-2.26%)
888 Holdings
-0.06 (-1.09%)