New Jersey October: Strong Online Sports Handle
MS Finance reports on ground Growth/Cannibalization similar to September
Morgan Stanley Research reports: NJ announced Oct results, including sports betting. Sports betting handle was up 42% m/m, driven by online (+66% m/m), but revs halved on low (4.5%) reported hold. Bricks-and-mortar revs were in line w/ Sept, up 8% y/y.
October sports betting handle (including free play) was strong, up 42% m/m to US$261m, with online up 66% m/m, despite September being seasonally strong due to the start of the NFL season (typically 2x bigger than the avg. month in Nevada, ~1.3x Oct). However, NJ sports betting revenue was only US$12m in October, 51% below $24m posted in September, due to low headline hold (4.5% in the month vs. 13% last month).
MS, adds: “We suspect hold was artificially low due to cash accounting of ‘future bets’ placed in prior months, some of which were redeemed in October, and likely customer friendly sporting results (on-site reported hold was just 3.3%), though YTD completed events hold is still healthy at 5.8% (MSe 5% for the US market). Payment difficulties were less of a headwind in October, supporting online play (76% of October revenue), and results benefitted from a full month of online contributions from Ocean Resort/William Hill (opened 9/2), Monmouth Park/William Hill (opened 9/4), and Bally’s (opened 9/6), with more apps open in Oct too. YTD, NJ’s sports betting market share leaders are Resorts/DraftKings/BetStars (33%), Meadowlands/FanDuel (29%), Monmouth Park/William Hill (14%), Borgata/MGM/GVC (10%), and Ocean Resort/William Hill (7%). Resorts/DraftKings plan to open a new 5,000 square foot sports book facility on Nov 20th.”
Bricks-and-mortar NJ casino revenue (ex sports betting) grew 8% in October, with same-store win down 12% due to the impact of the two new casino openings in June, Hard Rock and Ocean Resort. This is roughly in line with the prior month result, when total revenue was up 8% and SS was only down 11% and there is a calendar headwind due to one fewer Sunday vs. October 2017.
Three key points: 1) MGM’s Borgata casino revenue came in at down 8% Y/Y, or 14% adjusting for hold vs. MSe down 10% y/y for 4Q and prior month down 10% hold adjusted, 2) CZR’s total AC casino revenue was down 20% in October (16% hold normalized) vs. MSe 15% for all of 4Q and down 14% in the prior month with Harrah’s casino revenue down 22% (18% hold adjusted vs. MSe down 14%), Caesars down 21% (18% hold adjusted vs. MSe down 15%), and Bally’s down 15% (14% hold adjusted vs. MSe down 17%), and 3) The two new properties in the Atlantic City market are seeing mixed results vs. our expectations, with Hard Rock’s revenue of US$23.2m in October suggesting with normal seasonality, revenue is annualizing only ~US$300m vs. MSe ~US$400m. Ocean Resort revenue of US$13.1m for October yet again suffered from low hold, but normalizing, suggests the property is annualizing close to our US$200m forecast.
NJ internet gambling (ex sports betting) grew 30% y/y in October, accelerating vs. 26% in Sept, driven by Golden Nugget which was up 58%, Caesars up 18%, Tropicana up 7%, Borgata up 4%, and Resorts roughly flat. Total online gaming revenue was US$27m for the month, still small relative to on ground (US$201m). The market appears on track to surpass >$300m of revenue, with likely further support as online sports betting ramps and customers are cross-sold.
