Key Takeaways
- Accel Entertainment is expected to benefit from favorable terms for video game terminals (VGTs) in Chicago, with no additional city-level tax.
- Regional gaming operators are investing in capital projects to combat external competition, with Churchill Downs and Boyd expected to increase value over time.
- New York online sports betting has shown growth, with a 12% year-over-year increase in handle and 9% year-over-year increase in gross gaming revenue (GGR) for the week ending December 21.
- The implied hold rate for New York online sports betting has decreased to 6.3% for the week ending December 21, but has increased to 9.8% for Q4 to date.
Introduction to Wall Street Bets
Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry. The report provides insights into the latest trends and developments in the industry, including updates on video game terminals, regional gaming operators, and online sports betting. In this article, we will delve into the key findings and takeaways from the report, highlighting the prospects for Accel Entertainment, regional markets, and New York online sports betting.
Accel Entertainment Benefits from Favorable Terms
Accel Entertainment, a supplier of video game terminals, is expected to benefit from favorable terms for VGTs in Chicago. According to Truist Securities’ Patrick Keogh, the city is likely to introduce VGTs in the new year without imposing additional city-level tax. This development is seen as a material positive for Accel, which has been facing concerns over a slowing Illinois market. As a result, Accel’s shares reacted positively, rising 3.5% on the news, although they have since decreased slightly. The favorable terms for VGTs in Chicago are expected to accelerate the timeline for Accel’s growth, making it an attractive investment opportunity.
Regional Markets Show Promise
Regional gaming operators are investing in capital projects to combat external competition, according to David Katz of Jefferies. Churchill Downs and Boyd are expected to increase value over time through their capital investments, while Penn Entertainment’s investments in its properties are offset by less productive digital investments. The Street’s patience for limited-productivity digital gaming investments by land-based operators has worn thin, with Caesars and Penn being examples of companies that need to evolve their strategies. As regional markets continue to evolve, it is essential for operators to invest in projects that drive growth and increase value for shareholders.
New York Online Sports Betting Growth
New York online sports betting has shown significant growth, with a 12% year-over-year increase in handle and 9% year-over-year increase in gross gaming revenue (GGR) for the week ending December 21. According to Estelle Weingrod of J.P. Morgan, the implied hold rate for the week was 6.3%, down 18 basis points year-over-year. However, for Q4 to date, the OSB handle was up 12% year-over-year, with GGR up 36% year-over-year, resulting in an implied hold rate of 9.8%, up 174 basis points year-over-year. The growth in New York online sports betting is a positive trend for the industry, with operators expected to continue to invest in digital platforms to drive growth and increase revenue.
Conclusion and Future Outlook
In conclusion, the Wall Street Bets report provides valuable insights into the latest trends and developments in the gambling industry. Accel Entertainment is expected to benefit from favorable terms for VGTs in Chicago, while regional gaming operators are investing in capital projects to drive growth. New York online sports betting has shown significant growth, with a 12% year-over-year increase in handle and 9% year-over-year increase in GGR. As the industry continues to evolve, it is essential for operators to invest in projects that drive growth and increase value for shareholders. With the favorable trends and developments in the industry, investors can expect a positive outlook for the gambling sector in the coming year.