Expert Analyst Shares Insights about the US Gambling Sector

Ahead of the traditionally busier summer season, gambling operators are still facing some uncertainties across the United States. Major recent sports events such as the Super Bowl and the NFL helped bring mixed results, varying from one operator to the other. Yet, an important factor throughout the year would be potential changes to the interest rates by the Federal Reserve.

Barry Jonas, an expert analyst with Truist Securities, who was recently quoted by CDC Gaming, spoke about current trends, addressing uncertainties to the gambling sector. He explained that despite the optimism at the start of the year about the potential decrease in interest rates, cuts remain uncertain in light of recent commentary on a federal level.

The Federal Reserve interest rates are significantly important for the gaming vertical. A decrease in the rates combined with a period of stability may create potential opportunities for mergers and acquisitions, business combinations, leasebacks or sales of casinos from Real Estate Investment Trusts (REITs), suggested the expert. Still, according to Jonas, while the Fed “attempts to combat stubborn inflation” such a scenario may be delayed.

According to Jonas, the operators are currently focusing on reducing debt on their balance sheets in a move that may address the uncertainties related to the fluctuating interest rates. However, he added: “But absent M&A and predictable organic growth, many of our names are stuck in value land.”

“While we were optimistic at the start of the year that rates would be headed downward this year, recent Fed commentary has added uncertainty to rate cuts this year.“

Barry Jonas, expert analyst at Truist Securities

Price Targets for Gaming Operators Updated

The analyst changed slightly the price target for Caesars Entertainment to $58, down from $62. A downward trend was also observed for the price target of Golden Entertainment from $45 to $44. On the other hand, Station Casinos’ price target was increased from $58 to $60 per share, Jonas confirmed.

Recently, a survey by Truist Securities designated DraftKings as a “clear winner,” when compared to its competitors within the US gambling sector. This positive vibe was reaffirmed by Jonas who said that the iGaming and betting operator is “best positioned” for further growth and expansion.