Macquarie Maintains Positive Stance on US Gambling Market

In a recent report, analysts at Macquarie Equity Research have expressed a sense of cautious optimism regarding consumer behavior in the US gambling market. Despite some challenges faced in January, the analysts noted a return to more stable behavior among consumers during February and March.

Macquarie Offers Insights from 9th Annual Consumer Bright Ideas Conference

Highlighting potential risks such as declining saving rates, increasing credit card delinquencies, and high-interest rates, the analysts maintained a positive outlook on the activities of domestic consumers. They emphasized, cited by Next.io, historical trends indicating outperformance of their coverage universe during periods of declining interest rates, which they anticipate could serve as a tailwind in the latter half of the year.

The research note, released following Macquarie’s 9th Annual Consumer Bright Ideas Conference, discussed the observations made during the event, which saw participation from over 20 B2C businesses.

One area of particular interest is the online gambling sector, where Macquarie remains bullish. They reported a 31% year-on-year growth in US online gambling in January, driven by significant increases in both online sports betting and iGaming. 

However, the analysts cautioned that operators without robust same-game parlay offerings may face challenges in maintaining hold rates, particularly following negative outcomes such as those experienced during this year’s Super Bowl.

Macquarie Forecasts Strong Growth for Online Gambling Market

Despite these considerations, Macquarie anticipates a 23% growth rate for the online gambling market in the first quarter of 2024, with a projected 19% increase for the full year. While acknowledging the possibility of positive iGaming legislation within the next 12 months, they emphasized a conservative approach in their estimates, predicting a 22% organic growth in the first quarter.

Among specific companies, Macquarie expressed optimism regarding Penn Entertainment and its venture ESPN Bet, identifying it as having the highest potential upside at 94%, with a target price of $33. 

Additionally, Macquarie highlighted the potential for deeper integrations with the ESPN app and access to its user database as further tailwinds for Penn Entertainment, positioning the company for significant cross-play and omnichannel synergies in the future.

Following the clear success demonstrated by the 1.1 million downloads within the initial week of launching in 17 US states, Penn Entertainment’s CEO, Jay Snowden, anticipates continued positive impact and growth for ESPN Bet, with further enhancements slated before the commencement of the US football season.