SECTOR NEWS

MGM Resorts (MGM), Penn National (PENN), Boyd Gaming (BYD), and Churchill Downs (CHDN) were among notable companies in the space that reported earnings this week. MGM reported a slight earnings miss, reporting Q3 adjusted EPS of ($1.08), compared to analyst consensus of ($1.04), and revenue of $1.1 billion, compared to a consensus of $1.24 billion.

Penn National, on the other hand, reported a Q3 earnings beat and CEO Jay Snowden said, "...In addition to the record results of our brick and mortar operations, one of the highlights of the quarter was the launch of our much-anticipated Barstool Sportsbook app in Pennsylvania, which has been well received. As we look ahead, we continue to see solid results across the portfolio in October, which is being driven not only by our margin improvement, but also our sustained revenue performance as we have continued to manage the ongoing COVID-19 restrictions. In sum, we believe we can close out the year with positive momentum."

Churchill Downs and Boyd gaming reported Q3 earnings beats, as well. Outside of earnings reporting, DraftKings (DKNG) announced it will officially be launching its mobile sportsbook app in Tennessee, on November 1. Tennessee will become the ninth state to offer DraftKings' mobile and online sports betting product, more than any other legal sports betting operator in the United States, the company said. 

COME ON VIRGINIA DON'T LET 'EM WAIT

John Domen of WTOP News reported Virginia is moving quickly to launch sports betting throughout the commonwealth, with applications for mobile betting licenses flowing into the Virginia Lottery ahead of the deadline. It’s expected that about a dozen different companies will be granted licenses sometime in mid-January, which, compared to some states, is on the small end of things, WTOP noted.

“We understand that the black market has existed for centuries, right?” Prince William County state Senator Jeremy McPike told WTOP, who sponsored the legislation that ultimately became law earlier this year. “Billions of dollars are exported overseas right now because people are still going to place bets, or [use] bookies in different cities and neighborhoods.”

Under the legislation enacted, the state will get 15% of all gross betting revenue, and gamblers will not be allowed to bet on college athletic events involving schools located in Virginia. 

COLORADO TAX REVENUE TAKES HIT FROM FREE SPORTS BETS

Kevin Simpson of The Colorado Sun reported that more than $207 million was legally wagered in September on sports in Colorado. However, promotions and "free bets" have reportedly caused a drop in tax revenue. After an initial rise, tax revenues last month dropped to their lowest level since sports betting became legal in May. The Sun noted that the highly competitive nature of sportsbooks have caused operators to offer virtually "can't-lose" bets, thus cutting into the "holding percentage" of the bets operators pay taxes on.

Reportedly, the hold was 1.9% last month, but usually ranges between 6%-12%. “In September, operators offered free bets to new players who were coming into the sports betting market specifically for football, and they used free bets as a customer acquisition tool during a football push,” Suzi Karrer, a spokeswoman for the state Department of Revenue, told the Colorado Sun.

“We anticipate seeing the same push by operators during other large events. For example, the Final Four or the playoffs could see the same marketing push to gain market share by operators.” Licensed sportsbook operators in Colorado include BetMGM, DraftKings, William Hill (CZR), and FanDuel (PDYPY). 

Publicly traded companies in the space include: Boyd Gaming, Caesars, Churchill Downs, DraftKings, Flutter Entertainment, Gan Limited (GAN), Las Vegas Sands (LVS), MGM Resorts, Penn National, William Hill (WIMHY), and Wynn Resorts (WYNN).