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: DraftKings (DKNG) announced a strategic new relationship to create upscale Sports & Social/DraftKings sports bars beginning in the Nashville and Detroit markets, pending regulatory approvals. The Sports & Social/DraftKings venues will be designed by ICRAVE. "Today, so much of sports betting is focused on the mobile-technology aspect, however the in-person experience is an integral layer that we look forward to advancing alongside Sports & Social's premier dining and entertainment offerings," said Ezra Kucharz, chief business officer at DraftKings. "By aligning with one of the fastest-growing entertainment concepts in the country, we now have the opportunity to bring our world-class products to life by offering engaging, interactive and fan-first destinations to skin-in-the-game customers."
Cumulus Media (CMLS) and WynnBET, the mobile sports betting app from Wynn Resorts (WYNN), launched a multi-year, multi-platform partnership which activates Cumulus Media's ability to reach more than 250M listeners each month to drive users to the WynnBET app. As part of the agreement, WynnBET leverages Cumulus Media's targeting technology, which aims to enable WynnBET to customize multiple brand messages and deliver tailored content to different markets and demographics across hundreds of radio stations. "This partnership with CUMULUS MEDIA provides WynnBET the ability to deliver specific, customized messaging to targeted markets throughout Cumulus's network of hundreds of stations," Wynn Interactive CEO Craig Billings said. "In addition, WynnBET will have a significant advertising presence on Westwood One's nationally syndicated programming, including football pre-game and play-by-play, and we will work with Cumulus to create some exciting, branded content over the life of the partnership."
Barstool Sports is moving into college football games as both the exclusive title sponsor and broadcast partner of the Arizona Bowl, which is slated for December 31, Sportico's Emily Caron reported. The bowl game will move off linear TV as a result with the deal after several years of airing on CBS Sports (VIAC), the author said, noting that Barstool will take over broadcast distribution. Financial terms of the agreement were not disclosed. "We really believe that what we can do is take the best of traditional broadcast and take the best of traditional sponsorship and do both in a brand new way," Barstool CEO Erika Nardini said. "We think we'll bring new fans. We know we will bring a level of energy, and we'll cover the game in a way that is completely unique, and uniquely Barstool." Barstool Sports will stream the Arizona Bowl on its website, app and social media channels. Penn National (PENN) has a 36% stake in Barstool Sports and is the operator of the Barstool Sportsbook app.
The New Orleans Saints and Caesars Entertainment (CZR) announced the formation of a 20-year, exclusive naming-rights partnership that rebrands New Orleans' downtown stadium as the "Caesars Superdome." Caesars Superdome will host all Saints home football games, and Super Bowl LIX to be played in February 2025. The building will also host the 2022 NCAA Men's Final Four, the annual Sugar Bowl and College Football Playoff contests, a variety of concerts and hundreds of other annual events including Essence Festival, the Bayou Classic football game between Grambling State and Southern University, the New Orleans Bowl and the Louisiana State High School Athletic Association Football Championships. Tom Reeg, CEO of Caesars Entertainment, said, "We've had a strong relationship with the New Orleans Saints for nearly two decades and we are thrilled with the opportunity to strengthen it and celebrate our commitment to the city, the state, and the entire Gulf Coast region." Caesars Superdome will "stand as testament to Caesars' commitment to the New Orleans Saints and to the city of New Orleans as it embarks on a $325 million renovation to transform Harrah's New Orleans into Caesars New Orleans," the company added. Caesars Superdome will stand as the company embarks on a $325M renovation to transform Harrah's New Orleans into Caesars New Orleans.
THE STRIP COVERS UP AGAIN: The Nevada Gaming Control Board announced in an emergency directive: "On July 27, 2021, the Centers for Disease Control and Prevention, or CDC, updated its guidance relating to the mitigation of the spread of COVID-19 and the Delta variant. In part, the updated guidance states that everyone, regardless of vaccination status, should wear a mask in public indoor settings in areas of substantial or high transmission. Emergency Directive 045 adopts all CDC guidance related to requirements for facial coverings. Governor Sisolak issued Emergency Directive 047 on July 27, 2021, which provides a grace period for full compliance with all guidance issued by the CDC related to the use of face coverings. Therefore, licensees in a county deemed an area of substantial or high transmission shall ensure that all employees, patrons, and guests properly utilize face coverings, subject to the conditions in Emergency Directives 045 and 047, effective 12:01am on Friday, July 30, 2021." Based on current CDC data, Clark county, where Las Vegas is located, is among the areas deemed to be showing "substantial or high transmission," the board noted. This comes as Nevada reported June Las Vegas Strip gaming win up 156.3% compared to 2020 to $610.56M. While the summer months have been expectedly slow, a pick up is expected with football season around the corner. Nevada has one more likely slower month, July, to report before things pick up in the U.S. sports betting world. However, Legal Sports Report's Matthew Waters noted that July will be a month worth marking in the history books even if handle slows down. Sportsbooks are just $6.6M in revenue short of the $1B revenue milestone since June 2018. New Jersey sportsbooks were the first to break the threshold, collecting $1.16B in total revenue since the state’s June 2018 launch.
EYES ON MASSACHUSETTS SENATE: The Boston Red Sox and DraftKings announced a deal making DraftKings the official Daily Fantasy Sports provider of the franchise. The Red Sox represent DraftKings' most recent local sponsorship agreement in the Northeast, after previously solidifying deals with the New England Patriots and Boston Celtics. While DraftKings has solidified deal with Boston sports teams, there is still no consensus proposal for sports betting in Massachusetts. While both sides reportedly want to work together in more than just DFS, Waters said. there is work to be done before a DraftKings Sportsbook is found at Fenway Park. Allowing teams to place sportsbooks in or near their facilities was suggested by two amendments to the House sports betting proposal. The idea was partially shut down. H 3993 calls for the Massachusetts Gaming Commission to study giving professional teams and leagues betting licenses. The amended bill passed 156-3 in the House last Thursday and was referred to Senate Ways and Means Monday. The Massachusetts Senate has been quiet since the House passed the bill and it is unclear when it will act. The Senate has its own sports betting proposal in S 269 from Senator Eric Lesser. That bill has not been amended since the Joint Committee on Economic Development and Emerging Technologies hearing. The two bills differ on collegiate betting, tax rate, license fees and league data. LSR noted that If the Senate passes S 269, a conference committee could be the most likely outcome to reach a compromise.
EARNINGS RECAP: A few companies in the sports betting and iGaming sector reported quarterly earnings this past week. Churchill Downs (CHDN) beat analyst expectations in Q3. The company reported that gaming delivered record net revenue and record adjusted EBITDA and the company's wholly-owned gaming properties delivered 3.6 percentage points of sequential margin expansion. Churchill Downs ran the 147th Kentucky Oaks and Derby with "strong" ticketing, NBC viewership, sponsorship revenue, and margins despite capacity restrictions. The company said, "Four of our wholly-owned casino properties delivered record net revenue, Adjusted EBITDA, and margins. Our wholly-owned casino properties delivered 10.3 percentage points of margin expansion compared to the same quarter in 2019. Rivers Casino Des Plaines and Miami Valley Gaming delivered record net revenue, Adjusted EBITDA, and margins as well as significant margin expansion compared to the same quarter in 2019."
Concurrently, Churchill Downs announced a $76M expansion at Derby City Gaming that includes construction of a hotel, additional gaming positions and expansion of the current amenities at the facility in order to better serve and attract guests. The project will add 135,000 square feet of new space to the facility and open with 200 additional gaming positions. The new space will be able to ultimately accommodate up to 400 new gaming positions. The expansion will include a VIP gaming space, a new sports bar, a stage for live entertainment and a restaurant and bar. The adjoining five-story hotel tower will include 123 rooms with 108 standard guest rooms, 14 corner suites and a VIP suite. Construction on the project is scheduled to begin in early 2022 pending rezoning review and approval by the City of Louisville. The expanded gaming floor is targeted to open in late 2022 and the hotel is expected to open in the spring of 2023. Additionally, Churchill Downs announced three multi-year capital investments to transform key areas of Churchill Downs Racetrack. These projects will ultimately provide new guest experiences for the Kentucky Derby in the coming years. These investments round out the previously-announced Turf Course replacement project which is currently underway and is on schedule to be ready for racing at the 148th Kentucky Derby in May 2022.
Similarly, Boyd Gaming (BYD) beat analyst consensus in its Q2 report. During Q2, all three operating segments set all-time records for operating margins, while the Las Vegas Locals and Midwest & South segments also achieved all-time records for Adjusted EBITDAR. Of the Company's 26 open properties, 25 grew Adjusted EBITDAR at double-digit rates from the second quarter of 2019. Keith Smith, President and CEO of Boyd Gaming, said: "Our Q2 results reflect the strength of our operating strategy as our streamlined cost structure, enhanced capabilities and focus on our core customers all continue to drive strong results throughout our portfolio. We achieved record results for Adjusted EBITDAR and operating margins, with Companywide margins exceeding 43% and Las Vegas Locals margins approaching 57%. During the quarter our business continued to strengthen, as gaming revenues surpassed 2019 levels. We are encouraged that the strength from the first half of the year has carried into July, and are confident in our ability to continue delivering robust levels of EBITDAR and margin performance. These outstanding results are a tribute to the hard work of the entire Boyd Gaming team and their shared dedication to our transformed operating model, which will continue to create long-term value for our stakeholders." Truist analyst Barry Jonas raised the firm's price target on Boyd Gaming to $87 from $73 and maintained a Buy rating on the shares. The company generated a "sizable" Q2 earnings beat thanks to the benefits of fiscal stimulus and COVID vaccine as "strong" trends continued into July, the analyst told investors in a research note. Jonas adds that Boyd's "streamlined" operating model and higher margins are "here to stay" in the "new normal". Stifel analyst Steven Wieczynski also raised his firm's price target on Boyd Gaming to $88 from $82 and reiterated a Buy rating on the shares as he "materially" raised his core EBITDAR estimates for 2021-2023 following Q2 results that were "substantially better" than he was expecting. While acknowledging Boyd shares "could trade sideways around variant news for the foreseeable future," Wieczynski added that he believes a lot of the company's cost savings achieved during the pandemic should prove permanent.
While Bally's (BALY) did not report Q2 earnings, the company did provide Q2 revenue guidance that outpaced analyst expectations. As a result of better than expected operating performance at its land-based retail casinos and interactive businesses, Bally's does not plan to issue incremental common equity or draw on the previously disclosed Gaming and Leisure Properties, Inc. commitment to fund the Gamesys acquisition. Bally's continues to evaluate investment options with potential strategic partners and such investment is not necessary to fund the Gamesys acquisition. Consistent with U.K. regulatory requirements, Bally's arranged bridge financing for the Gamesys transaction from Deutsche Bank AG, London Branch, Goldman Sachs USA and Barclays Bank PLC. Bally's intends to seek to refinance the bridge facility and its and Gamesys' debt through one or more capital market transactions, which are currently expected to include public or private bond offerings and a company-wide bank credit facility.
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).
Genius Sports
-0.2 (-1.16%)
Accel Entertainment
-0.11 (-0.98%)
Bally's
+0.06 (+0.12%)
Boyd Gaming
-0.775 (-1.34%)
Caesars
-2.06 (-2.29%)
Churchill Downs
-2.09 (-1.12%)
DraftKings
-1.4 (-2.81%)
Use FLUT
+0.06 (+0.07%)
Gan Limited
-0.3 (-1.94%)
Las Vegas Sands
-0.28 (-0.65%)
MGM Resorts
-0.65 (-1.70%)
Penn Entertainment
-1.51 (-2.17%)
Rush Street Interactive
-0.01 (-0.10%)
Scientific Games
-0.67 (-1.08%)
Score Media
-0.23 (-1.49%)
Wynn Resorts
-0.81 (-0.81%)