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

WynnBET (WYNN) announced a multi-year content marketing and affiliate partnership with technology and digital publishing platform, Minute Media, owner and operator of six global sports and culture brands including The Players' Tribune, FanSided, 90min, and The Big Lead. Under the deal, WynnBET will tap into Minute Media's network of owned brands, media personalities, athlete influencers, and open technology platform to create story-driven content that introduces WynnBET to an average of 60M monthly users in the United States, the company said.

Wynn Resorts also made headlines after CEO Matthew Maddox told CNBC's Jim Cramer that about 60% of Wynn employees have been vaccinated, but the company won't mandate employees receive a Covid-19 vaccine. However, Maddox noted those who choose not to must be tested for the virus weekly. "I don't think it's our job to be mandating vaccines for everybody, but what I am mandating is that we're Covid free in our staff," Maddox said in an interview on "Mad Money."

Fox Corporation (FOX-A, FOX) issued the following response to media reports regarding its legal dispute with Flutter Entertainment (PDYPY): "Fox Corporation has filed suit against Flutter to enforce its rights to acquire an 18.6% ownership interest in FanDuel Group-an American sports betting brand-for the same price that Flutter paid for that interest in December 2020. The suit was filed as an arbitration before JAMS in New York, NY by consent of the parties."

DraftKings (DKNG) announced that it has acquired Blue Ribbon Software, a Tel Aviv-based jackpot and gamification company that provides platform-agnostic, real-time gamification tools that allow for fully customizable jackpot promotions. DraftKings said it will now be able to enhance the customer experience by integrating BlueRibbon's "unique jackpot functionality," including personalized promotions and rewards tailored to the individual customer or jackpots that pay out across DraftKings' various product offerings. 

MOBILE SPORTS BETTING TO GET NY APPROVAL

Governor Andrew Cuomo, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie announced an agreement on the FY22 New York State Budget which includes the legalization of mobile sports betting. New York plans to approve an online sports betting model that was backed by Governor Cuomo, Ryan Butler of The Action Network reported. Despite Cuomo's support, the bill is largely opposed by most state lawmakers and the majority of the gaming industry.

Under the bill, which will be passed as part of the state's $200B FY22 budget, the New York Lottery would reportedly issue requests for proposals from two mobile betting operators, which would subcontract out skins to four sportsbooks. While many details of the model were not disclosed, Senator Joseph Addabbo told Action that the New York Gaming Commission would work on further regulatory follow-up measures. Officials are aiming to launch online sports betting in the Empire State before the 2021 football season.

Butler noted that this model appears to particularly benefit the four existing upstate casino sportsbook partners: DraftKings, FanDuel, BetRivers and bet365, all of which could bid for one of a limited number of licenses. It remains unclear if “second-skin” partners such as Penn National’s (PENN) Barstool Sports and PointsBet were eligible to bid for a license. The Oneida Nation, which had a preemptive deal with William Hill (WIMHY), Akwesasne Mohawk, affiliated with Fox Bet and Seneca tribes reportedly could be excluded from statewide mobile wagering. Legislation will also exclude in-stadium betting kiosks at at major New York sports venues lawmakers had previously supported. Chris Sommerfeldt and Denis Slattery of the New York Daily News noted that New York will be able to rake in as much as $99M this fiscal year from taxes on mobile betting, with the revenue expected to increase to $500M per year.

Sites like DraftKings, whose customers mostly place bets through smartphone apps, will have to fork over some 50% of their New York profits directly to the state in tax, “We want to thank the legislature and Governor Cuomo for the progress made in bringing legal, regulated, mobile sports betting to New York,” said Griffin Finan, VP of government affairs and associate general counsel for DraftKings. “We look forward to learning more as the process continues to unfold.” FanDuel sang the same tune. “We are pleased to see this important step toward bringing legal, regulated mobile sports betting to New York achieved and are grateful for the leadership of the Governor and legislature,” FanDuel VP Chris Jones said. “We look forward to the next steps of the process and hope we are ultimately able to bring our FanDuel Sportsbook product to customers in our home state.”

Truist analyst Barry Jonas wrote that while New York's announced budget has included legalized mobile sports betting, the ultimate structure is "far from clear" and may "not disappoint" Governor Cuomo's prior intention to not help casinos make money. Jonas writes that the bill's language makes it difficult to handicap which companies ultimately participate in the NY market and that the two platforms with a minimum four skins structure may limit the market, adding that history would suggest that a Gross Gaming Revenue, or GGR-based, bidding process may not be conducive to profitability.

ANALYST COMMENTARY

Morgan Stanley analyst Thomas Allen upgraded Caesars (CZR) and MGM Resorts (MGM) to Overweight from Equal Weight this week after having visited Las Vegas. The analyst came away with the impression that consensus is "grossly underestimating" the earnings power of companies exposed to what he sees as a "fast, strong recovery." During his visit, numerous market participants told him their bookings were stronger than current occupancy and that booking windows were extending, Allen told investors, adding that in some instances he heard that bookings, gambling, and hotel revenues are already approaching 2019 levels. He has raised his 2021 EBITDA estimates for Caesars along with Boyd Gaming (BYD), MGM Resorts and Wynn Resorts by 7% on average, the analyst noted.

Meanwhile, JPMorgan analyst Joseph Greff assumed coverage of Caesars with an Overweight rating with a price target of $101, up from $96. The analyst thinks Caesars "continues to offer attractive exposure to many (positive) themes" within the U.S. gaming sector, including a near-term recovery in Las Vegas and permanently higher margins given operating efficiencies relative to pre-pandemic levels.

Argus analyst John Staszak upgraded Wynn Resorts to Buy from Hold with a $160 price target. The upgrade reflects the recovery in the company's Las Vegas business and growth in its Boston operations as more COVID vaccines are rolled out and leisure travel returns, the analyst tells investors in a research note. Staszak further anticipates a recovery in Macau and the launch of its iGaming and sports betting platform in 10 U.S. states. 

Jefferies analyst David Katz initiated coverage of Golden Nugget Online (GNOG) with a Buy rating and $28 price target. Golden Nugget's positioning and product strength have been proven in New Jersey, said Katz, who believes the company's performance through 2020 provides a framework for low double-digit percentage iGaming market share and "100+% 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), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn National (PENN), Rush Street Interactive (RSI), Scientific Games (SGMS), Score Media (SCR), William Hill (WIMHY) and Wynn Resorts (WYNN).