Sports Gaming – Primed to Lead on the Road to Recovery

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Normally bustling with traffic, the Las Vegas Strip remains closed with a heavy police presence on a Friday night.

 

Las Vegas casinos are closed, secured by barricades and heavily guarded by police, the vibrant buzz of the world-famous Strip quashed by Gov. Steve Sisolak’s order to shut down all gaming activity on March 17.

On April 30, he laid out a “Roadmap to Recovery” that extended the shutdown through May. Phase one allows the reopening of some businesses on May 15, but does not include casinos, bars or nightclubs.

Sisolak gave no definitive date for resuming those businesses, nor did he provide details on subsequent phases.

According to national polls, roughly two-thirds of Americans believe it’s too early to reopen businesses at the risk of bringing on a second wave of coronavirus infections and deaths. Online sports gaming faces no such handicap.

However, protesters are pushing back across the nation, and at least 30 states have opened businesses adhering to health guidelines and capacity restrictions. Some business owners are reopening without permission, prepared for legal action if necessary.

It’s past time to get people back to work and proceed cautiously with ramping up the economy, says Las Vegas Mayor Carolyn Goodman.

 

Lockdown called ‘Total insanity’

The mayor ignited a storm of media backlash and public criticism when she labeled Gov. Sisolak’s protracted lockdown of all nonessential businesses, including Strip hotels and casinos, as “total insanity.”

Her interview with CNN’s Anderson Cooper went viral when she mentioned that “we’ve had viruses for years,” while thousands of Las Vegans cruised the Strip two days after the interview in support of the mayor’s call to restart the economy.

Nevada’s Assembly Republican Caucus urged Gov. Sisolak to start the process of reopening the economy. But he has remained recalcitrant, pledging to delay re-opening the casinos until the phase three or four, at the tail end of his plan, indicated to be late May or even into June. MGM resorts (MGM) is studying a plan to hosting the re-start of the NBA season at its various properties, a potential catalyst to accelerate sports gaming.

 

Chomping at the bet

With NBA and MLB seasons suspended and uncertainty about the NFL, pent-up demand for sports gambling is undeniable. The sentiment is that gamblers are eager to return to their favorite sports book or betting app.

Prior to mass disruption in the national economy, online sports gaming leader, Score Media and Gaming (SCR.V) saw “great momentum” across its core operations, Chairman and CEO John Levi said in his second-quarter earnings conference call.

In sports betting, the company achieved quarter-over-quarter growth in both gaming handle and gross gaming revenues with increases of 58% and 83%, respectively, and further enhanced development of theScore Bet media and gaming platform.

Score secured market access to operate in Colorado through an agreement with a subsidiary of U.S. gaming operator, Jacobs Entertainment, and remains on track to launch theScore Bet in both Colorado and Indiana later this year, subject to receiving licenses and approvals.

“We continue to strategically pursue market access opportunities across the U.S. and offer our support to legislative efforts to progress sports betting, both in the U.S. and in Canada where possible,” Levi said.

Score also finalized a deal to become an authorized sports betting operator of the NBA, providing access to official NBA betting data and related marketing rights for theScore Bet.

In late April, International Gaming Technology (IGT) signed an agreement to power Circa Sports’ PlaySports mobile sports betting app in Colorado. That followed Circa’s launch plans for the app earlier in the year in partnership with Century Casinos (CNTY).

“We look forward to introducing patrons and sports fans in Colorado to the excitement of Vegas-style sports betting through the Circa Sports Colorado app,” said Derek Stevens, CEO of Nevada-based Circa Sports.

DraftKings, (DKNG) went public in April and stock immediately jumped 10 percent, giving the Boston-based sports betting platform a market value of more than $6 billion. Morgan Stanley projected 31 percent revenue growth through 2025.

While 14 states have legalized sports betting since 2018, we believe at least 10 more will follow in the aftermath of COVID-19, which has severely depleted state budgets and reduced tax revenue. The online sports gambling hold is expected to grow from $1.5 billion in 2019 to $12 billion in 2025, thus increasing the appeal to mega resorts such as MGM Resorts International (MGM) and Caesars Entertainment Corp. (CZR).

League officials are discussing how best to resume play, possibly restricting games to geographic regions and limiting attendance. NBA Commissioner Adam Silver said the league is “not in a position to make any decisions, and it’s unclear when we will be.”

MLB officials, team owners and players are optimistic about starting the baseball season this year, though games could be played in front of empty stadiums.

 

Release the data

Las Vegas Mayor Goodman wants available data from every major city in the world to be examined to determine the safest path to reopening.

Though Nevada health officials won’t share the methodology that justifies the governor’s shutdown, the initial goal of “flattening the curve” for coronavirus cases is being accomplished in key areas such as New York City and New Jersey.

By objective standards using moving averages to smooth out spikes, Nevada should be removing its stay-at-home order. New coronavirus cases per million population have shown a downward trajectory since early April, and death rates have declined for more than 14 days.

Now we have a harder goal to define: widespread testing.

“The conundrum of the asymptomatic poses a significant fly in the ointment for any regime of testing, particularly since there are no known vaccines yet discovered to cure any corona viruses and the concept of herd immunity is being disputed for eliminating COVID-19,” said Robert Maltbie, CFA and president of Singular Research. With the public and the “science” opposing a rapid reopening of the physical resorts and casinos, online gaming looks primed to breakout first.

 

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Singular Research Staff
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