Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

Challengers in sports betting

On November 22, analyst Barry Jonas of Truist Securities, with the help of HoldCrunch, a specialist analytics company founded by ex-FanDuel VP Tom Johnson, looked at the challengers to DraftKings and FanDuel in the online sports betting realm.

“BetMGM was on the outer edge of being competitive on price in Q3,” wrote Jonas. “At the same time, BetMGM is spending more on promos than others and not returning top-tier margins. Handle share also rose, with HoldCrunch data indicating the handle rise was neither price nor product driven, but rather promos.

“Fanatics has powered ahead on handle share growth, but HoldCrunch data indicates this is even more attributable to promotions than BetMGM. Fanatics had the least competitive prices and the lowest margins of the group.

“Caesars sits in a different spot – the platform is more competitive on price and had better NGR+ Margins than BetMGM (after taking price and promos into account), though handle share is not growing. This profile points to product gaps, not that others don’t also have those gaps. It’s just that promo spend might have masked product gaps in BetMGM and Fanatics whereas with Caesars they’re more visible because of its lower promo spend and competitive prices.

“ESPN Bet is more similar to Caesars than the others as its Q3 prices were the most competitive in the industry, with NGR+ Margins nearly at DraftKing’s level. However, its market share remains low and is not growing. Like the other challengers, this indicates ESPN Bet has a long way to go on product.”

Sportradar prospects

J. P. Morgan analyst Samuel Nielson examined Sportradar’s status on November 20 in a note.

“Shares are up ~40% since mid-October,” Nielsen wrote, “and we continue to be encouraged with Sportradar’s ability to leverage its sports data rights to innovate on product and generate pricing power that is garnering higher share of wallet (especially around live betting), creating a favorable setup for margin expansion (as evidenced in the implied 4Q24 guidance) as we come out of the most recent rights renewal cycle and into a multi-year period of (what should be) continued top-line momentum and lower operating expense growth, in our view. We see multiple upcoming catalysts that should provide upside to shares, including easier comparisons, the launch of regulated online sports betting in Brazil, and its upcoming investor day in the 1Q25).”

U.S. revenue per available room

Truist Securities analyst Patrick Scholes, also on November 20, looked at revenue per available room across the U.S.

“There are many moving pieces to last week’s results that present a weaker net result than what we will expect for many of the following weeks of 4Q,” Scholes wrote. “Veterans Day’s public holiday shifted into this Monday from the 2023 prior week Friday (net negative). Las Vegas and San Francisco had difficult comps given the lapping of the F1 race and APEC, respectively.

“There may have also been some lingering negative business travel demand post-election. Positive was that hurricane impact continues, especially for some major southeast markets and midscale and economy properties.”