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 reported June statewide gaming win up 8.06% to $1.28B. June Las Vegas Strip gaming win was up 22.7% versus last year to $734.78M.
Bally's (BALY) announced the preliminary results of its modified "Dutch Auction" tender offer, which expired at 12:00 midnight, New York City time, at the end of the day on July 22. Based on the preliminary count by American Stock Transfer & Trust Company, the depositary for the tender offer, a total of 4,858,465 common shares were validly tendered at or below the purchase price of $22.00 per share and not validly withdrawn, including 2,143,640 common shares that were tendered through notice of guaranteed delivery. In accordance with the terms and conditions of the tender offer and based on the preliminary count by the depositary, Bally's expects to accept for payment and purchase approximately 4,858,465 common shares at a purchase price of $22.00 per share, for an aggregate purchase price of $106,886,230, excluding fees and expenses relating to the tender offer. These shares represent approximately 9.2% of Bally's outstanding common shares.
EARNINGS: On Thursday, Gaming and Leisure Properties (GLPI) reported record second quarter results above expectations. Peter Carlino, chairman and CEO of GLPI, commented, "GLPI's record second quarter results and our ongoing momentum highlight the value of our strategic, accretive approach to the expansion and diversification of our portfolio of top-performing regional gaming assets managed by leading operators, while carefully managing our capital structure and cost of capital. We continue to benefit from new and innovative growth opportunities with existing and new tenants, while driving increased capital returns to shareholders in the form of growing dividends. Given the predictability of our rental revenue streams, we believe the resiliency of our portfolio will be highlighted in the current economic environment."
Boyd Gaming (BYD) reported Q2 earnings that topped analyst's estimates as well. Adjusted EBITDAR was near all-time highs yet again in the second quarter. Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: "We delivered another strong quarter, with quarterly Adjusted EBITDAR that was second only to last year's record results. The second quarter of 2021 was a challenging comparison due to benefits from government stimulus and the lifting of COVID restrictions. This quarter's excellent results were driven by a continued focus on our core customer and sustained efficiencies throughout our business. Our operating trends remain strong, as play from core customer segments grew both year-over-year and sequentially from the first quarter of 2022. We also improved Companywide operating margins from the first quarter despite inflationary pressures. Overall, we are encouraged by the continued strength of our business, and remain confident in our strategy and our ability to navigate today's uncertain economic environment." The company also provided an updated timeline on the Pala interactive deal. The company continues to make progress toward completing its previously announced acquisition of Pala Interactive for cash consideration of $170M. Pending the receipt of all remaining regulatory approvals, the company anticipates it will close on the acquisition around year-end. In addition, the company plans to open Sky River Casino near Sacramento, California in early September 2022. The company has a seven-year management agreement to operate Sky River on behalf of the Wilton Rancheria Tribe.
Stifel analyst Steven Wieczynski lowered the firm's price target on Boyd Gaming to $73 from $84 and maintained a Buy rating on the shares following the company's Q2 report, stating that he has "essentially priced in a full-blown recession" with his revised 2023 and 2024 EBITDA estimates and cut his out-year EBITDA estimates by about 14%. However, Wieczynski said he "absolutely" does not think Boyd's business will get "that bad" and believes that even in a 2008/2009 type recession the company "would be financially sound and could even still return capital and pay down debt." He believes the market has priced in "an almost worst case scenario" for Boyd, the analyst added.
Churchill Downs' (CHDN) second quarter results also surpassed consensus from analysts. Notably, its live and historical racing segment delivered record revenue and adjusted EBITDA, with adjusted EBITDA up 67% compared to the second quarter of 2021. Gaming net revenue decreased $1.5M primarily due to a decrease of $4.6 million at Harlow's and a $4.4M decrease at Riverwalk as a result of the current economic conditions, competitive pressures, and a mask mandate at Harlow's that was discontinued in early June. These decreases were partially offset by a $4.8M increase at Oxford due to the lifting of restrictions that were in place during the prior year quarter, a $2.1M increase at Fair Grounds from the 2022 Jazz Festival that more than offset the decline in Fair Grounds Slots revenue due to current economic conditions and the ongoing closure of our Houma off-track betting facility and a $0.6M net increase in all other properties.
DraftKings (DKNG ) intends to release Q2 financial results on the morning of August fifth. Benchmark analyst Mike Hickey anticipates "favorable execution risk" on the quarter relative to consensus. The analyst noted that last month the company reiterated that they had seen no evidence of any impact from macroeconomic factors affecting discretionary consumer spend on their platform or category. Hickey told investors that he remains cautious on the consumer. June state handle results have not experienced much weakness, despite year-over-year decreases in New Jersey and Pennsylvania, which Hickey believes most likely reflects the fewer comparable NBA matches in the month compared to the prior year. He also predicts DraftKings ups its market share in New York, while sitting at 26% at the conclusion of June.
BofA analyst Shaun Kelley sees room for a very small revenue guide-up from DraftKings and expects guidance to wholly include Golden Nugget and Ontario. The analyst's focus will be on any changes in cost trajectory given the broader macro environment, the core online sports betting product offering given FanDuel’s (PDYPY) share, Ontario trends and California legislation/strategy and potential impact, he told investors
A STATE DIVIDED: Legal sports betting is in jeopardy in Massachusetts as the July 31 deadline approaches, Mike Mazzeo of Legal Sports Report wrote. members of the House and Senate can not come to an agreement on issues like college betting and the Massachusetts sportsbook tax rate. Governor Charlie Baker has repeatedly made know his desire to sign a bill that would regulate and legalize sports betting.. “I certainly hope it makes it to the desk,” Baker said, according to Mass Live. The House wants college sports betting, while the Senate opposes. The House has a more operator-friendly tax rate proposal of 15% for mobile and 12.5% for retail, with promo deductions allowed. On the other side, the Senate has a 35% tax on mobile and 20% tax on retail, with no promo deductions allowed. “I fear that a bill could get done, but only if the House caves on a lot of issues,” an industry source told LSR. If a compromise can not be reached, it will be back to Square one in 2023 on an issue already that has been debated and discussed for years.
JUNE SWOON: June digital gross gaming revenue, or GGR, for states that reported was down 22% month-over-month to $599M according to BofA's Kelley. On a same state basis, reported state GGR was down 42% from last month and dipped 33% year-over-year while online sports betting handle was down 18% month-over-month and up 2% year-over-year. The data shows a major deceleration due to a timing shift for the NBA’s Playoffs & Finals, which took place in June/July last year and a lower hold in June, Kelley told investors. The analyst estimates June same state handle gained 11% year-over-year compared with year-to-date average through May of up 47%. Up north, Kelley noted that Ontario downloads dropped 41% month-over month, with theScore (PENN) regaining its share lead, but its overall share declined due to gains from Rush Street (RSI), DrafKings, and BetMGM (MGM).
NEXT IGAMING LEADER: According to the New Jersey Division of Gaming Enforcement and the Michigan Gaming Control Board, New Jersey online casino and poker websites reported $814.5m in revenue for the first half of 2022, while Michigan reported $757m. When adjusted for population, the figures result in $87.89 gambling revenue per capita in New Jersey and $75.31 gambling revenue per capita in Michigan, Andrew McDermott of OddsSeeker reported. Michigan started online gambling in January 2021, compared to November 2013 for New Jersey. "Based on the year-over-year growth trajectory for New Jersey, since inception, it seems clear that Michigan will inevitably pass New Jersey online gambling revenues and become the largest and most important betting and iGaming market in America.” said Frank Weber, Sports Editor at OddsSeeker.com. BetMGM topped the online casino list for both states, with Caesars (CZR) and BetRivers in second for New Jersey and Michigan respectively. For New Jersey, the order was DraftKings, FanDuel, Golden Nugget and WynnBet (WYNN). For Michigan, it was Caesars in third, followed by DraftKings, FanDuel and WynnBet.
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) and Wynn Resorts (WYNN).
Bally's
-0.56 (-2.50%)
Gaming and Leisure Properties
-0.565 (-1.07%)
Boyd Gaming
-0.29 (-0.52%)
Churchill Downs
-6.12 (-2.82%)
DraftKings
-0.115 (-0.84%)
Use FLUT
+0.22 (+0.45%)
Penn Entertainment
+0.255 (+0.74%)
Rush Street Interactive
-0.13 (-2.29%)
MGM Resorts
+0.06 (+0.18%)
Caesars
+0.85 (+1.90%)
Wynn Resorts
-0.28 (-0.44%)
Accel Entertainment
+0.07 (+0.58%)
Gan Limited
+0.145 (+4.22%)
Genius Sports
+0.115 (+4.61%)
Las Vegas Sands
-0.63 (-1.64%)