Bet On It: Macau Stocks Get Boost From Gaming Concession Renewal News

SECTOR NEWS: BetMGM, a partnership between MGM Resorts International (MGM) and Entain Plc (GMVHF), announced that the company will launch its online sportsbook in New York on Monday, January 17. "Players in the Empire State will soon be able to access the benefits of betting with BetMGM, an Official Sports Betting Partner of the Knicks, Rangers and Madison Square Garden Arena," the company said.

Michigan State University Athletics, MSU Sports Properties and Caesars (CZR) announced a multi-year partnership to make Caesars Sportsbook the Official and Exclusive Sports Betting Partner and iGaming Partner of MSU Athletics.

The National Football League said that the 2021 NFL regular season averaged 17.1M viewers for TV plus Digital, calling it "the highest regular season average since 2015 and up 10% vs. 2020." The league added: "During the 2021 NFL regular season, NFL games ranked as the top 16, 48 of the top 50 and 91 of the top 100 telecasts on TV. Throughout the season, there were 370B total minutes consumed which is up +18% vs. 2020 and the second-highest total on record behind only 2015. For the first time, each NFL team played 17 regular season games, providing fans with an extra week of regular season NFL action."

After being named one of the first operators to receive a license for mobile sports wagering operations in the state, Caesars Entertainment has "made history with its online and mobile sports betting app, Caesars Sportsbook, accepting its first sports wagers in the Empire State," the company said. Caesars Sportsbook brings its customer loyalty program, Caesars Rewards, to New York. With mobile sports betting officially live, eligible New Yorkers can download the Caesars Sportsbook app, register, deposit funds and jump right into the action with launch offers to commemorate this historic moment. Caesars Sportsbook is currently live in 21 states and jurisdictions - 15 of which are mobile.

Given the big gain in MGM Resorts' stock last year, investors might be tempted to take their winnings off the table, Lawrence Strauss wrote in last week's edition of Barron's. But the casino operator still has some good cards to play in 2022, the author added.

MACAU RENEWALS: Macau plans to give a maximum of six casino licenses that will carry a term of 10 years, which can be stretched by another three years, according to Bloomberg's Shirley Zhao and Abhishek Vishnoi, citing a government briefing Friday. The Macau administration also said it plans to limit the public float of gambling operators and wants to increase the proportion of local ownership in casino firms from the current 10% to 15%, the report noted. Stifel analyst Steven Wieczynski said that Macau gaming stocks, namely Las Vegas Sands (LVS), Wynn Resorts (WYNN), and MGM Resorts (MGM), should finally get a "nice relief rally" as the Macau government has outlined what their gaming concession renewals should look like. The analyst noted that the concession framework would keep the number of concession holders at six, with a length of 10 years with a potential three-year extension, which he views as a "slight negative." Wieczynski also noted that he had heard the concession renewal length could be as short as five years and as long as 20 years, adding that he can "live with this" as five years really would have done nothing from a long-term investor's view. The analyst maintained Buy ratings on Las Vegas Sands and Wynn and kept a Hold on MGM.

EUROPEAN COMPANIES GETTING IN ON THE ACTION: Citi analyst Monique Pollard said the firm is "increasingly bullish" on the size of the U.S. prize. She now forecasts along-term EBITDA opportunity of $9.3b, double what was expected this time last year. The analyst told investors in a research note that the revenue generated in states that are open is more than she had predicted, a greater number of states have launched/proposed regulation for online sports betting than she had forecast, and she expects a U.S. EBITDA margin of 30% medium-term. Pollard highlighted Flutter (PDYPY) and Entain’s "dominance" and expects it to continue, while Evolution’s product quality will drive its "strong" U.S. positioning. The U.S. is now 38% of the value in the firms target price for Entain and 50% for Flutter. She upgraded Flutter to Buy and remained Buy rated on Entain.

ILLINOIS; Illinois reported total November online handle of $745.9M, down 7% from October's record of $803.4M. The state's market share winners include DraftKings, FanDuel, and Rush Street Interactive (RSI). Benchmark analyst Mike Hickey remains optimistic the state will eventually legalize online casino. Total reported handle was $779.9M. Online wagering accounted for $745.9M or 96% of total handle. DraftKings, FanDuel and RSI continue to dominate the Illinois Gaming market, together making up about 82% of the total November handle. Then followed by Barstool (PENN) at $60.6M or 8% share, PointsBet (PBTHF) at $54.6M or 7% share, and Caesars at $20.2M or 3% share. The analyst anticipates DraftKings, FanDuel and RSI will continue to dominate the Illinois online sports betting market, with limited share shift until the in-person registration requirement is removed on March 5.

LAST DITCH EFFORT: Sportsbook operators are full speed ahead in their efforts to place a Florida sports betting question on the ballot in November, Brad Allen of Legal Sports Report reported. DraftKings is now offering free bets for all Florida sports betting customers if they get the 892,000 signatures needed. Operators are hoping the ballot question opens the market beyond the Hard Rock offering from the Seminole Tribe. The tribe has exclusivity over mobile FL sports betting, which it attempted to start this year before shutting down following a court defeat of its governing compact with the state. Reportedly Barstool Sports founder Dave Portnoy was asked to support the cause as he posted an "emergency press conference" video titled, “I Am Here to Save Sports Gambling in Florida” on Thursday to over 6M social media followers. Portnoy said, “They know I’m the king of Florida. Barstool Sportsbook, FanDuel, DraftKings, we all can be here but we need to to get it on the ballot... We need one million signatures by the end of January. We’ve already been working. They’ve turned to me to finish the deal, the closer.” As of Thursday, the Florida Education Champions initiative, backed by FanDuel and DraftKings, had 323,000 signatures. As this all plays, Floridians have no means for legal betting at all. The Seminole’s Hard Rock Sportsbook app was pulled in December following a slew of legal defeats which are also being appealed.

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).

Disclosure: None

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