Bet On It: Missouri sports betting certification process challenged with lawsuit

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: BetMGM (MGM) has become the first sports betting app to offer Nevada bettors connectivity through a single, digital wallet. Through its operation and partnership with MGM Resorts (MGM) and powered by Entain’s (GMVHF) technology, this feature makes BetMGM the only legalized sports betting app to allow Nevada residents and visitors to wager in the state and carry their funds to BetMGM mobile markets nationwide. The company said, “The convenience of BetMGM’s single account and wallet feature allows the user to sign up once in- person at an MGM Resorts property in Nevada and then enjoy the enhanced sports betting app across all U.S. BetMGM mobile markets,” the company stated.

A group of institutional investors is bringing a lawsuit against Entain (GMVHF) for compensation over a decline in the company’s share price following a bribery probe at its former Turkish subsidiary, the Financial Times’ Alistair Gray reported, citing law firm Fox Williams. The firm has filed a claim at London’s High Court on behalf of 20 investors who are demanding a total of over GBP 150M from the Ladbrokes and Coral owner after Entain struck a deal with prosecutors over alleged bribery at its former Turkish subsidiary, agreeing to pay GBP 615M to avoid a trial.

Bragg Gaming (BRAG) confirmed the launch of its newest games and Remote Gaming Server, or RGS, technology with Caesars Digital (CZR) in both Pennsylvania and Ontario. The launch marks the expansion of Bragg’s existing partnership with Caesars Digital, following earlier launches in New Jersey and Michigan respectively, doubling the number of states/provinces in which Bragg content is offered on Caesars Palace Online Casino and Caesars Sportsbook & Casino. The expansion also deepens the partnership between the two companies.

NFL BETTORS ANALYZED AHEAD OF SEASON: The Optimove Insights 2024–2025 Consumer Report on NFL Wagering Intentions provided an analysis of the betting behaviors, preferences, and trends among NFL bettors. Findings from the report include significant increases in betting frequency, confidence, and engagement, as well as insights into the motivations and habits of bettors:

• 71% of bettors placed bets on one or more games per week in the previous season, up from 63% in 2023.
• 43% of bettors wagered several times per week, an increase from 37% last year.
• 79% bet during the regular season, compared to 69% in 2023, with the Super Bowl being the second most popular event at 52%.
• 68% of respondents prefer point spread bets, followed by over/under and moneyline bets at 62%.
• 85% of respondents make live bets during games, a rise from 61% last year.
• 84% of bettors plan to bet on games in the 2024–2025 season, compared to 70% who did so last year.
• Brand loyalty remains low, with 68% of respondents using two or more betting sites per week, up from 54% in 2023.
• 42% of respondents cited promotions like free bets as the main reason for choosing a betting site.
• Marketing fatigue is less of an issue for NFL bettors, with only 22% preferring fewer messages from betting sites, down from 37% last year.
• 81% of bettors find messages personalized, and 83% feel their betting site experience is tailored to them.
• 94% participate in betting pools or contests, 79% play fantasy football, and 74% regularly watch the NFL.
• 90% of bettors believe that betting enhances their enjoyment of the game, with 54% stating it significantly enhances their experience.

SECOND HALF OUTLOOK: Craig Hallum told investors that based on the Q2 results and a “favorable” customer acquisition environment for U.S. online sports betting and iGaming, the firm is revising Q3 and Q4 estimates for DraftKings (DKNG). The analyst now anticipates a higher expenditure in Q3 compared to Q4, adjusting both EBITDA and revenue accordingly. This means increased promotional spending and marketing in Q3, which should yield benefits as the company moves into Q4. Despite these adjustments, the company remains well-positioned to capitalize on opportunities in both OSB and iGaming for the rest of the year, with new products enhancing engagement and loyalty, Craig Hallum said in a research note to investors. The firm maintains a bullish long-term outlook on the company and its stock.

CHALLENGE TO MISSOURI SPORTS BETTING: A lawsuit challenging the certification process of the Missouri sports betting ballot initiative has emerged, potentially thwarting a November vote, Pat Evans of Legal Sports Report wrote. On Wednesday, political consultants Jacqueline Wood and Blake Lawrence filed a lawsuit in Cole County Circuit Court against Missouri Secretary of State John Ashcroft. They claim that the methodology used to certify the Missouri sports betting ballot initiative is unconstitutional. Wood and Lawrence did not respond to requests for comment on Thursday night. The initiative needed at least 170,000 signatures. The campaign behind the initiative turned in approximately 370,000 before the May 5 deadline. “This effort to decertify our ballot inactive is completely without merit, as Missourians came out in force to sign the petition that will be on the ballot in November,” St. Louis Cardinals President Bill DeWitt III said in a statement. FanDuel and DraftKings have supplied in excess of $10M to Winning for Missouri Education. 

THIRD TIMES THE CHARM: In January, when the General Assembly reconvenes, South Carolinians can expect a renewed major push for legalized online sports betting, despite two recent legislative failures and new studies highlighting gambling’s social costs, Jack OToole of Charleston City Paper reported. Last year alone, states generated over $2.5B in taxes from $11B in industry revenue. “The success in terms of the tax revenue generated already in North Carolina will be enticing,” Shapiro said in an August 19 interview. “I would imagine that we’re going to see more of those types of (sports betting) bills and that there’s a good chance it would be legalized in the next couple years.”

ADDITIONAL ANALYST COMMENTARY: UBS downgraded Las Vegas Sands (LVS) to Neutral from Buy with a price target of $49, down from $70. The analyst believes the recovery in Las Vegas Sands’ Macau EBITDA “gets more protracted.” Macau will likely continue to “grind higher,” but not see a “step change” until the economic outlook for the mass market customer improves, the analyst noted. When taking into account the economic outlook in mainland China, the firm thinks the broader segment of the Macau market may not recover in the near term to previous expectations. UBS reduced its 2024 Macau sector EBITDA estimate to 86% of 2019 levels from 89%, and 2025 Macau sector EBITDA estimate to 92% of 2019 levels, from 95%.

Wolfe Research upgraded Gaming and Leisure Properties (GLPI) to Outperform from Peer Perform with a $57 price target. The firm said its price target implies a 23% total return including dividends. An extension of an earnings profile tot 2026 begins to capture key growth opportunities for the company, the analyst told investors.

Morgan Stanley initiated coverage of Flutter Entertainment (FLUT) with an Overweight rating and $247 price target. Flutter has a “compelling” global long-term growth story, and it is the scale leader in online gambling, three-times larger than its nearest peers by revenue, the analyst contends. The firm says the company has established leading positions in the U.S., UK and other global markets. It believes the “steep inflection” of U.S. profitability is transforming the financial profile of the business while the U.S. primary listing is increasing liquidity, and index inclusion should provide technical tailwinds. Flutter is Morgan Stanley’s top pick in gambling.

Barclays lowered the firm’s price target on Entain to 800 GBp from 1,070 GBp and reiterated an Equal Weight rating on the shares.

JMP Securities elevated its price target on Caesars to $59 from $58 and reiterated an Outperform rating on the shares. JMP walked away with a more positive view of the company after catching up with management earlier in the week, telling investors that continued execution on a path to sub-5x lease-adjusted leverage, excluding proceeds from non-core, non-operating assets, suggests shares trading at 6.5x 2026E consensus EBITDA significantly undervalues them compared to historical public market and M&A multiples.

Raymond James upped the firm’s price target on Gaming and Leisure Properties to $53 from $50 and backed an Outperform rating on the shares. The firm increased estimates and price targets for the majority of the net-lease real estate investment trusts. It continues to be bullish across the sector, saying lower rates and higher stock prices have improved the cost of capital, which should translate into better accretion and higher out-year estimates. 

CBRE upgraded Entain to Buy from Hold with a 900 GBp price target.

Benchmark increased its price target on DraftKings to $44 from $41 and reaffirmed a Buy rating on the shares. DraftKings remains “a 2024 top idea,” said the analyst, who sees the shares being down 2% year-to-date setting up the stock for “a strong run” through year-end. DraftKings’ improved outlook, fueled by stronger market win margins in Q3, new user growth, traditional tax mitigation strategies, and valuation contraction ahead of the NFL season, “creates an attractive entry point,” the analyst told investors in a research note.

Deutsche Bank boosted the firm’s price target on Flutter Entertainment to 18,717 GBp from 17,589 GBp and kept a Buy rating on the shares.

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 (FLUT), Gambling.com (GAMB), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn Entertainment (PENN), Rush Street Interactive (RSI), Super Group (SGHC) and Wynn Resorts (WYNN).