The American Gaming Association has a statement out on the merger announcement from DraftKings (Private:DRAFT) and FanDuel (Private:DUEL).
"DraftKings and FanDuel have sped up the debate on legalizing sports betting by demonstrating its popularity and mainstream nature. Fans have a desire to be invested in games. We’re building on the momentum created by DFS to remove the federal ban on sports betting.”
Many gaming industry analysts are marking down 2017 as the year sports betting legislation is considered seriously by Congress.
There's a growing wave of support for a legalized sports betting framework in the U.S. to take advantage of the huge market and reel in some of the money going to off-shore and illegal betting options.
State lotteries, sports betting shops and Native American casino entities are all calling for action from Capitol Hill or on a state-by-state basis.
Professional sports league also cooperating. "We've been supportive of legalized sports betting, and we'll continue to be supportive," says NBA Senior VP Dan Spillane. Already in the mix, a NHL expansion team is due to debut in Las Vegas next year and the NFL is trying to lure the Oakland Raiders to the region.
Perhaps the most intriguing angle with legalized sports betting is the growing interest from tech firms in having their hands in the billions of dollars likely to flow through the U.S. betting market. ESPN reports that Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) already have patents covering sports betting platforms, while some industry experts think a widespread mobile betting platform from a tech heavyweight is inevitable (Facebook or Google?).
What to watch: If Congress takes the final decisive step, a number of dramatic partnerships and M&A deals between Silicon Valley and existing casino operators could start flying.
Areas of focus during the confab are expected to include e-sports, online gaming opportunities in the U.S., M&A trends, and how the industry can increase millennial traffic to casinos.
The event has the usual all-star roster of gaming industry speakers, although the highlight may be former NBA Commissioner David Stern's participation on a CEO roundtable set for Thursday that will delve into sports betting.
Pokémon Go is on an annual run rate of $1B, according to an estimate from Cowen Research. Nintendo (OTCPK:NTDOY) is well-positioned to benefit from the ongoing phenomenon through its stake in Pokemon Company and publisher Niantic.
The Pokémon craze was brought up by a variety of companies during their Q2 earnings calls as analysts questioned on the impact of the mobile game on foot traffic, virtual reality potential, mind share, and products/accessories sales.
Former NBA Commissioner David Stern will make a key speech at the Global Gaming Expo next month in which he will present the case for legalizing sports betting, according to ESPN.
Stern's turnaround on sports betting lines him up with the views of current NBA commissioner Adam Silver who supports a federal framework of betting regulations. The NBA has a small stake in FanDuel (Private:DUEL) in what could be considered a bit of a hedge.
Sports betting is slated to be a major focus of the Global Gaming Expo scheduled for September 26-September 29 at the Sands Expo. The Nevada Gaming Commission is also considering allowing remote wagering from all 50 states in what could be a major disruption to the industry if passed.
Earlier this week, a federal court blocked New Jersey from offering legalized sports betting as it upheld the Professional and Amateur Sports Protection Act.
POTUS watch: Both Donald Trump and Hillary Clinton have offered some support for legalized sports betting in prior comments, but don't have well-defined positions on the issue.
Wells Fargo issues a detailed report on the gaming sector to clients.
The headline item is the firm's forecast for a 8% to 10% decline in Macau revenue for July (consensus -5.8%). Aside from the soft read on Macau, Wells does point to some improved trends at regional casinos in the U.S. Iowa, Illinois, Ohio, and Maryland all saw revenue growth in June. Tracking from Wells indicates rates for MGM Resorts properties are up 3% Y/Y in July and 9% for August
On a year-to-date view, gaming stocks are +3% to trail the +4% performance of the S&P 500.
The gaming stocks currently rated Outperform by Wells are listed below.
Gaming and Leisure Properties (NASDAQ:GLPI): "We remain positive on GLPI given its attractive relative valuation, and stable dividend."
Red Rock Resorts (Pending:RRR): "RRR has the best assets in a growing market with high barriers to entry, in our view."
Churchill Downs (NASDAQ:CHDN): "CHDN has iconic, high ROIC, and fast growing assets, with significant earnings and dividend growth potential, in our view."
MGM Resorts (NYSE:MGM): "We see positive risk-reward based on a strong Las Vegas outlook."
Penn National Gaming (NASDAQ:PENN): "We believe PENN is undervalued given significant FCF and growth opportunities."
Churchill Downs (CHDN +6%) races higher after the stock was added to the S&P Midcap 400.
Though Wall Street has been snoozing on Churchill Downs for most of the year as only firm has changed its rating (Hilliard Lyons to Buy in May), SA contributor Vince Martin has a breakdown on why the recent decline makes the bullish argument on CHDN more interesting.