Hedgeye edge
Vigorish is the fee charged by a bookmaker for accepting a gambler's wager, also known as the “vig” or “the juice”
Nary an investor nor analyst we’ve spoken to doesn’t think that the US sports betting market is a big opportunity. Estimates range from $10 billion to $45 billion and we’ll offer our TAM estimate and so much more on Monday when we present our deep dive into the US sports betting market. Of course, the “vig” to the operators will be significantly less and must cover what could be significant customer acquisition costs. There are a lot of dogs in this fight that need to be fed and competition is likely to be heated over the next few years, at least until a few dominant players take over and costs can be rationalized. While sports betting has certainly received a lot of attention by investors (check out the charts of PENN and DKNG), not enough work has been done on iGaming, in our opinion. We’ll dive deep into iGaming as well and lay out the potential winners and losers across the SB and iGaming landscape. These new business lines represent a big opportunity for regional casino operators who are already undergoing fundamental change, mostly for the better, and offer top line and juicy bottom line growth potential in this time of Covid – unusual in the gaming, lodging, and leisure sector.
Please join us on Monday, September 28th at 2:00PM ET.
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TOPICS TO BE ADDRESSED ON THE CALL
As always, we will try to deliver our findings through detailed and data driven analysis. Here are some of the key topics we plan to address.
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Sports Betting/iGaming – Reversing secular trends; onward to hyper growth
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Review of the industries – a deeper look at the evolution of sports betting and iGaming in more mature markets and what’s taken place so far in the US – not just a review of the usual suspects
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TAM analyses – Stress testing multiple TAM (at maturity) approaches and comparing vs Street and consultants
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Market by market analyses – Modeling industry growth cadence and state by state roll out. First iteration of our near and long term forecasts for the industries, all performed on a probability weighted basis
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Hedgeye data tracking – real time review of mobile app + desktop usage and downloads, and a closer look at the offshore market dynamics
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Competition – review of competitive dynamics (promos, CAC, etc.) and comparing each company’s “mouse trap” and path to profitability
- B&M Land Based Gaming – Don’t forget about the surprisingly juicy legacy business
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Review of top line performance to date – under the hood stealth drivers and benefits the industry has experienced of late
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Leisure wallet analysis – Casinos (and Sports) getting a boost from other leisure buckets, we look at how long that could stretch
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Demographics improving – Regional operators done well in the face of deteriorating demographics but Covid and SB could be an offset
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Costs & margins – Gauging sustainability of recent margin performance + assessing longer run sustainability, post Covid
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BYD to the Hedgeye Best Ideas List – We recently added BYD to the Best Ideas List on the long side. Please see our note from today here.
- The Opportunity & The Stocks
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From no (top line) growth, to hyper growth – review of each operator’s footprint, partnerships, positioning, know-how, and other factors to determine ultimate success
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Other factors to consider – Covid-19’s direct and indirect impact on this gigantic new opportunity + other factors that could be make or break
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Initial views on market composition – Laying out our case for the big players and how we see the market shaping up with the knowledge we have today
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Stocks/companies that will be mentioned – BYD, CZR, DKNG, MGM, PENN, Barstool, Fanduel, William Hill
