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: Churchill Downs (CHDN) announced that the company has entered into an agreement to sell 49% of United Tote, a wholly-owned subsidiary of CDI, to NYRA Content Management Solutions, a subsidiary of the New York Racing Association, or NYRA. NYRA is a not-for-profit corporation that operates the three largest Thoroughbred horse racing tracks in the state of New York - Aqueduct Racetrack in South Ozone Park, Queens; Belmont Park in Elmont; and Saratoga Race Course in Saratoga Springs. The transaction is subject to usual and customary closing conditions, including applicable regulatory notices and approvals, and is expected to close by the end of 2022. As part of the agreement, the United Tote pari-mutuel settlements business will be excluded and will remain with CDI. CDI and NYRA intend to work together to create and provide a pari-mutuel solution through United Tote that will expedite the expansion of horse racing onto sports wagering platforms to reach new customers. Pending the appropriate regulatory approvals, NYRA will transition its pari-mutuel wager processing to United Tote in 2023 under a separate agreement.
FuboTV (FUBO) has added SportsGrid, a 24-hour sports wagering streaming network. The network features real-time sports news, data, analytics, and statistics. SportsGrid's reporting and analytic platform includes daily odds, lines, matchups, injury reports, statistics, news, and more across the NFL, NBA, MLB, NHL, college sports, golf, tennis, and soccer.
On Disney's (DIS) Q2 earnings conference call, CEO Bob Chapek said: "In terms of sports betting, we have been in conversations for quite a long time now with a number of different platforms to add some utility to sports betting and take away some friction for that for our guests. We have found that basically our sports fans that are under 30 absolutely require this type of utility in the overall portfolio of what ESPN offers. So we think it's important. We're working hard on it and we hope to have something to announce in the future in terms of a partnership there that will allow us to access that revenue stream and also make sure that our guests are being -- having their needs met."
BetMGM (MGM) announced a multi-year partnership extension with the National Football League, becoming one of the league's official sportsbook partners in Canada. BetMGM was among the first operators to go live in Ontario, having launched its online sports betting and iGaming platforms in April. As a part of the newly expanded relationship, BetMGM now has the rights to use official NFL marks in Canada and advertise on NFL-operated digital platforms throughout the region. Additionally, BetMGM will offer Canadian customers access to exclusive NFL experiences.
EARNINGS RECAP: Wynn Resorts (WYNN) reported Q2 earnings on Tuesday, falling short of analyst's expectations on EPS and revenue. Operating revenues from its Las Vegas operations were $561.1M forQ2, an increase of $206M from $355.1M for the second quarter of 2021. Adjusted property EBITDA from the company's Las Vegas operations was $226.7M, compared to $133.2M for the second quarter of 2021. Table games win percentage for the second quarter was 24.6%, within the property's expected range of 22% to 26% and above the 23.2% experienced in the second quarter of 2021. However, the results of operations of the company's Macau operations for Q2 continued to be negatively impacted by certain travel-related restrictions and conditions, including COVID-19 testing and other mitigation procedures, related to the COVID-19 pandemic. "Our second quarter financial results reflect continued strength at both Wynn Las Vegas and Encore Boston Harbor. Our teams' ongoing focus on five-star hospitality and new experiences at our market-leading properties combined with very strong customer demand drove a new all-time quarterly record for Adjusted Property EBITDA at Wynn Las Vegas and a second quarter record at Encore Boston Harbor," said Craig Billings, CEO of Wynn Resorts. "In Macau, while COVID-related travel restrictions continued to impact our results, we remain confident that the market will benefit from the return of visitation over time." Shares were down over 4% in after-hours trading on Tuesday.
On the other hand, Accel Entertainment's (ACEL) second quarter results surpassed estimates. Additionally, the company provided full-year revenue guidance which came in ahead of estimates as well. Q2 Illinois revenue per location per day was essentially flat when compared to Q2 of 2021. Accel CEO Andy Rubenstein commented, “We are pleased with our performance this quarter and are focused on executing our growth strategy. We remain confident that our locally-focused business model creates a platform to outperform in difficult times and thrive under normal circumstances. We aim to leverage our proven business model and extremely strong financial position to continue our expansion and return capital to shareholders.” The company plans to end 2022 with an estimated 3,550-3,600 locations and an estimated 22,700-23,200 gaming terminals.
Brag Gaming (BRAG) reported Q2 EPS of EUR 0.00 compared to (EUR 0.11) last year and Q2 revenue of EUR 20.8M vs EUR 15.5M in Q2 of 2021. Cash and cash equivalents as of June 30 was $11.3M which reflects the $9.2M paid in the quarter for the acquisition of Spin Games. "Our strong second quarter results include significant year-over-year growth, as well as quarterly-sequential improvements for revenue, gross profit, gross profit margin and Adjusted EBITDA,” said Yaniv Sherman, CEO for Bragg. “In the 2022 second quarter, we generated quarterly records for revenue of EUR 20.8M, gross profit of EUR 11.6M, gross profit margin of 55.9%, and Adjusted EBITDA of EUR 3.1M. Our operating momentum highlights our continued success in serving a growing base of customers in an expanding number of regulated global iGaming markets, with turnkey iGaming solutions that power their businesses, including proprietary and exclusive third-party content. Following the completion in June of our acquisition of Spin Games, Bragg possesses the product development capabilities, industry expertise and licensed footprint across Europe and North America to achieve further and consistent progress on our content and market expansion growth initiatives."
OFFICIAL: Massachusetts Governor Charlie Baker signed the sports betting legalization bill into law Wednesday, his office announced. Baker expects the law being to be implemented over the next several months. "Our administration first filed legislation to legalize sports wagering in the Commonwealth several years ago, and I am glad to be able to sign this bill into law today," Baker said in a statement. "We appreciate the dedication and compromise that the Legislature demonstrated on this issue, and we look forward to supporting the work of the Massachusetts Gaming Commission on the responsible implementation of the law over the next several months." According to CBS News Boston, anyone 21 years old and older will be allowed to place a wager in Massachusetts with a 15% tax on in-person wagers and a 20% tax on mobile bets. Betting on Massachusetts colleges and universities will not be allowed unless they are playing in a post-season tournament like March Madness. "It's also going to create a whole new industry and a whole new sector for our economy and a whole new way for people to engage with their favorite teams," state Senator Eric Lesser told WBZ-TV when the bill passed. "I think given the scope of what we've included here, including college that's out of Massachusetts I think we're probably going to see 60-to-65 million dollars a year" While there was initial optimism the state could start taking bets at the beginning of the NFL season in September, the commissioners are now expecting for implementation to take longer than people anticipate.
AWAITING ONLINE SPORTS BETTING: The Maryland Lottery and Gaming Control Commission reported two sports wagering facility licenses qualified at its qualification hearings on Wednesday, including one for the Washington Commanders’ FedEx Field. The two facility licenses now head to the Sports Wagering Application Review Commission, which can award the licenses. The SWARC meets again August 17. Pat Evans of Legal Sports Report noted that the MLGCC also qualified Betfred for a sports wagering facility operator license, which does not need SWARC approval. Despite pressure from Maryland Governor Larry Hogan, the SWARC has still not provided an online launch date. Maryland voters approved sports betting in 2020 and Hogan signed enacting legislation in spring 2021. Hogan sent a letter to the SWARC this summer pushing for an online launch by September 8 in an effort to capture NFL betting. SWARC members approved draft regulations and applications at its July meeting. Those drafts are now waiting for legislative review commission approval.
ANALYST COMMENTARY: Deutsche Bank analyst Carlo Santarelli lowered the firm's price target on Wynn Resorts to $85 from $92 and reiterated a Buy rating on the shares. The company reported better than forecast Las Vegas and Encore Boston Harbor metrics, Santarelli told investors in a research note.
Cowen analyst Lance Vitanza lowered the firm's price target on Bally's (BALY) to $45 from $53 and kept an Outperform rating on the shares. The analyst said Q2 results were impacted by unfavorable macro headwinds in the International segment as well as profitability softness in AC. He said with a potential recession likely affecting regional casinos more than Las Vegas, we think caution for the second half is prudent.
Morgan Stanley analyst Ed Young trimmed the firm's price target on DraftKings (DKNG) to $30 from $31 and maintained an Overweight rating on the shares after the company's Q2 revenues and EBITDA beat his estimates by 7% and 35%, respectively. Management appears focused on narrowing losses and he lowered his own FY22 EBITDA losses estimate by 8%, telling investors that the "strong quarter" gives him more confidence in DraftKings' execution.
Barclays analyst Brandt Montour raised the firm's price target on DraftKings to $18 from $14 and reaffirmed an Equal Weight rating on the shares. The company reported a "healthy" Q2 beat, driven by revenue upside and cost controls, Montour told investors. Lower promotional intensity and a number of operators shifting focus toward profitability is a step in the right direction for DraftKings and the industry, says the analyst. However, Montour still thinks "it will be a bumpy ride."
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).
Churchill Downs
+3.755 (+1.77%)
FuboTV
-0.095 (-2.15%)
Disney
+3.54 (+3.01%)
MGM Resorts
+0.69 (+1.98%)
Wynn Resorts
+1.1 (+1.63%)
Accel Entertainment
+0.595 (+6.00%)
Bragg Gaming
+0.06 (+1.02%)
Bally's
+0.355 (+1.39%)
DraftKings
+1.97 (+10.64%)
Boyd Gaming
+1.04 (+1.84%)
Caesars
+1.83 (+3.71%)
Use FLUT
+1.263 (+2.25%)
Gan Limited
+0.48 (+12.83%)
Genius Sports
+0.39 (+9.61%)
Las Vegas Sands
+0.8 (+2.12%)
Penn Entertainment
+2.05 (+5.77%)
Rush Street Interactive
+0.005 (+0.08%)