Analyst: “Under-the-radar” Caesars can challenge BetMGM’s iGaming market share

Strength in Las Vegas referenced as Q1 estimates go up. But is iGaming where Caesars could really make a move this year?

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David Bain, Managing Director and Senior Research Analyst, B Riley Securities, believes Caesars Entertainment stock is currently underrated and has given shares stock a “buy” rating.

B Riley has also increased Q1 estimates for the operator: indeed, adjusted EBITDAR could reach as high as $955m in the company’s view, with Las Vegas contributing as much as $527m.

Among the factors Bain refers to, a key point is Caesars’ new iGaming app rollout – something B Riley sees as an “under-the-radar catalyst.”

While BetMGM is the online casino leader in US states with legalised iGaming, B Riley feels it is notable that Caesars recently increased its slot offering in New Jersey and Michigan from “~350 games to ~500.”

By comparison, BetMGM has over 700 slot titles, but B Riley feels Caesars’ new games will stand it in good stead, while its new app “will have improved marketing capabilities to tap its industry-leading 65 million gaming reward card membership.”

Naturally, Caesars will see iGaming (and the aforementioned leisure and convention centre sector) as a gap in the market, given FanDuel and DraftKings’ dominance in online sports betting

B Riley also referenced strength in the Las Vegas convention and leisure sector, something that will “continue” in Q2, while a new focus on profitability within the digital industry can also serve as a “catalyst” for Caesars – and the industry as a whole.

This new focus should “improve online gaming investor sentiment.” B Riley used the recent 82% monthly fall in promotional spend in Ohio as an example of brands looking for a “more rational promotional spend.”

GI Verdict: With FanDuel and DraftKings leading online sports betting in terms of market share in several key states, Caesars has usually had to settle for a lower ranking.

Where both it and MGM Resorts has a competitive advantage, though, is via its land-based offerings and heralded customer loyalty programmes. As such, it’s easy to see why a new app that utilises this customer database – much like FanDuel and DraftKings did with their fantasy sports databases – can raise market confidence.

Naturally, Caesars will see iGaming (and the aforementioned leisure and convention centre sector) as a gap in the market, given FanDuel and DraftKings’ dominance in online sports betting.

IGaming has the higher margins anyway, so here it's more about attempting to dislodge BetMGM. A greater amount of games and a better way of getting its players to play these games is a viable option for a company with Caesars’ connections and resources. Let’s see how Q1 plays out.


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