iGaming Continues To Set Records With MI Ramping as Sports Betting Rebounds On Strong March Madness Betting Activity - Craig Hallum

April 21, 2021 10:19 AM EDT
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Ryan Sigdahl, a senior research analyst at Craig Hallum, says that the iGaming sector has continued to rise rapidly after the Michigan online market made its debut on January 22.

Online betting and gaming operators in Michigan generated $42.7 million in sales for their first 10 days of activity to end January. Sigdahl notes that the top 4 operators - DraftKings (NASDAQ: DKNG), BetMGM (NYSE: MGM), FanDuel, and Penn National Gaming/Barstool (NASDAQ: PENN) - are maintaining ~90% market share.

“Michigan has outperformed even the loftiest of expectations since its launch in late January. iGaming GGR surpassed PA in Feb’21 despite the state being 20% smaller, although was modestly below in March. Sports betting bonusing as a % of handle has understandably declined from 7% in February to 4% in March, in-line with more mature states. This led to strong NGR of $19M during Mar’21 after 2 consecutive months of negative revenue – appropriate for a state out of the gates. At the operator level, BetMGM commands an early lead in iGaming while FanDuel leads in sports. DKNG sits close behind in 3rd for both,” Sigdahl writes in a note sent to clients.

When the data is broken down, PENN/Barstool had the fourth-largest market share (11% vs 13% in Feb) in the OSB market. This may be a result of less spending on marketing that will ultimately result in a better contribution margin.

“RSI has been taking greater iGaming market share sequentially (4.6% in January to 5.4% in February to 7.0% in March). We are impressed with the market share gains despite more disciplined marketing spend and not having a mobile app. State Sports Betting – online GGR +241% m/m with FanDuel #1 share of GGR, followed by BetMGM and DKNG. State iGaming – GGR +19% m/m with BetMGM #1 share followed by FanDuel and DKNG.”

Therefore, iGaming and OSB traders should expect upside in Q1 earnings versus consensus, according to Craig Hallum analyst.

“A few OSB states have not yet reported March data (notably IL, CO, TN and VA), but our bottoms-up build by month, state and operator license implies strong Q1 revenue growth and upside versus consensus for DKNG and RSI. Driven mostly by an acceleration in retail casino performance in March (continued into April), we expect upside to PENN.”

“GAN gave Q1 guidance with only one week left in the quarter so we would expect good visibility at that time to financial results, but our checks imply a beat. Its operator customers in MI (FanDuel, Churchill, Wynn) are taking market share,” the analyst adds.



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