Gaming sector outlook positive
David Katz from Jefferies is optimistic about the gaming sector’s prospects this year. Analyzing second-quarter earnings, Katz reiterated a bullish view on the online gaming sector, while noting recent state tax increases. For DraftKings, a positive second quarter is expected despite potential tax impacts in the second half of 2025 and FY26, impacting spending provisions for prediction market entry. For Sportradar, forecasts were adjusted due to FX considerations and expected value from the IMG deal. Estimates for Rush Street and Gambling.com remain unchanged, with a Buy rating on all.
DoubleDown Interactive attracts interest
David Bain from Texas Capital Securities analyzed DoubleDown Interactive’s financial standing. The company possesses net cash close to $9 per share, close to its share price, and an unusual negative CY25E/CY26E EV/EBITDA valuation in equities. DoubleDown Interactive generates visible net free cash flow exceeding $2.50 per share, driven by its high-margin, asset-light online gaming business. The estimates exclude potential enhancements from direct-to-consumer payments, regulatory impacts on sweepstakes gaming competition, and anticipated 2026 igaming cash flow uptick. DoubleDown’s financial flexibility offers options for dividends and M&A, contributing to Bain’s positive outlook. The price target is over double the current stock price.
Bally’s faces possible rating downgrade
On July 2, Fitch Ratings placed Bally’s Corporation and its debt under Rating Watch Negative due to increased EBITDAR leverage from an ongoing combination of its international interactive business with Intralot. The sale-leaseback transaction of the Twin River facility presents additional execution risk. Proceeds from this transaction are expected to repay a substantial part of its senior secured 2028 term loan and improve Bally’s financial flexibility for its projects in Chicago. However, if leverage issues persist or Bally’s fails to release the Twin River property from its collateral pool, a rating downgrade is possible.
Top 25 U.S. markets see RevPAR drop
According to Dan Politzer of J. P. Morgan, Revenue Per Available Room (RevPAR) in the top 25 U.S. markets declined 2.8% to $144, while other markets saw a 2% gain to $104. The luxury segment outperformed with a 3.8% RevPAR increase, followed by upper upscale with a 0.1% decline, and the economy segment lagged with a 3.1% fall.
Implications of IGT’s sale
Jefferies’ David Katz analyzed the sale of IGT’s gaming and digital business, which yielded $4 billion in net cash. The company released plans for the proceeds, including a special dividend of $3 per share and a $500 million buyback initiative. These steps appear modestly positive, shifting IGT’s strategic focus to executing lottery and digital operations successfully. Read more news.
