Century Casinos found itself in the red on April 10 following the release of higher-than-expected US Consumer Price Index (CPI) figures, signaling concerns about persistent inflation. However, despite the market’s reaction, one analyst remains optimistic about the company’s prospects.

Macquarie Analyst Predicts 53% Upside for Century Casinos

Macquarie analyst Chad Beynon, in a recent report to clients, upgraded Century Casinos from “neutral” to “outperform,” setting a price target of $5 per share. This represents a potential upside of nearly 53% from the current closing price of $3.27. Beynon believes that the recent selloff in Century’s stock, which has seen a 32% decline since the end of last year, is unwarranted.

While the broader market has seen modest gains, Century Casinos’ stock has experienced a significant decline, making it the cheapest operating company in Macquarie’s coverage universe. Beynon attributes this undervaluation to market misconceptions, particularly regarding Century Casinos’ real estate ownership structure.

Century Casinos, operating primarily in regional markets, has faced headwinds but also possesses significant growth potential. Beynon forecasts the company to achieve $168 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) on revenue of $700 million next year. 

Notably, Century Casinos could generate 85 cents per share in free cash flow, an impressive feat given its current market capitalization of $101 million.

The analyst identifies several catalysts that could drive Century Casinos’ rebound, including the opening of The Riverview, Poland’s re-licensing, and the completion of Caruthersville. Additionally, recent acquisitions such as Rocky Gap and Nugget are expected to contribute to medium-term growth.

Strategic Moves Propel Century Casinos Amid Leverage Challenges

Despite concerns about rising leverage due to expansion plans, Beynon remains confident in Century Casinos’ ability to deleverage, marking it as the largest one-year deleveraging opportunity in Macquarie’s coverage. 

The company’s renovation projects and strategic acquisitions are anticipated to yield attractive returns, positioning Century Casinos as a unique value and growth opportunity in the market.

Notably, Century Casinos reported strong fourth quarter and full year 2023 results, with a notable increase in adjusted EBITDAR and net operating revenues.

Despite a slight dip in earnings from operations for the year, the company’s expansion efforts in the US and successful acquisition strategies position it for a bright future, according to co-CEOs Erwin Haitzmann and Peter Hoetzinger.However, investors may need to exercise patience, as Century Casinos’ resurgence is projected to be a 2025 story. However, with a strong earnings outlook and potential catalysts on the horizon, the company’s long-term prospects appear promising.

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The Rank Group released its latest interim results, uncovering details regarding its progress over the six months ended December 31, 2023. The company referred to the period as H1 2023/24, with results pointing to an increase in net gaming revenue (NGR) year-over-year. Besides financial data, Rank Group released details regarding its expectations for 2024 in key markets.

Focusing on the UK, John O’Reilly, the company’s chief executive, explained that the business is positioned well for further growth, boosted by the upcoming regulatory changes within the retail gambling sector in the country. The changes are expected to come into effect at some point this year, according to the company, possibly around the summer. “These reforms cannot come soon enough in enabling us to modernize our proposition to better meet our customers’ expectations,” added O’Reilly.

“We are well positioned to optimize the opportunities afforded by the UK Government’s planned land-based regulatory reforms which will hopefully be implemented through the passing of secondary legislation in the summer of 2024.“

John O’Reilly, chief executive of The Rank Group

Last year, the Gambling Act review white paper was released, outlining a number of suggestions that are expected to completely overhaul the gambling industry across the country. Among the proposed changes are the implementation of limits for online slots, changes in the ratio of B and C gambling devices, as well as implementation of affordability checks, among other improvements.

Yet, so far the government hasn’t set a deadline for the implementation of the changes, while consultations with stakeholders on certain topics are still ongoing. Ultimately, the review of the Gambling Act 2005 is expected to ensure that the laws in the country fit the digital age.

The Company Posts Strong Results Despite Challenges

When it comes to financial results, Rank Group posted £362.6 million ($460 million) in NGR for H1 2023/24. This figure, compared to the £338.9 million ($430 million) reported for the corresponding period a year ago, showed an increase of 7%. Additionally, Rank Group confirmed that its operating profit for the latest trading period was £16.2 million ($20.6 million).

“Whilst it remains a challenging economic environment, we are positive about the future and expect LFL operating profit for the year ending 30 June 2024 to be in line with our expectations,“

reads a statement released by The Rank Group

While the company acknowledged that the economic environment remains challenging, it was still optimistic about its future performance. Rank Group said that it anticipates its upcoming financial results for the year ending June 30, 2024, to coincide with its initial expectations.

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Renowned betting and gaming operator Flutter Entertainment experienced a significant surge in its share value. Despite increased competition, the company’s FanDuel brand has maintained its leadership position in the USA, and its overseas investments also pay significant dividends. This development aligns with Flutter’s plans to enter the New York Stock Exchange after it stops trading its ordinary shares on Euronext Dublin by 23 January.

The US Market Presents Significant Opportunities

The notable 5% share price increase is primarily due to Peel Hunt’s favorable opinion on the company’s prospects, centering around its FanDuel brand. The investment firm projects Flutter’s US business to generate an adjusted EBITDA of $180 million for the full year of 2023. The following year should allow the gambling giant to cement its positions in established jurisdictions, doubling down on profitable markets.

Peel Hunt’s forecast for Flutter aligns with the company’s November guidance, predicting an adjusted EBITDA of approximately £1.44 billion ($1.83 billion), excluding the US market, and revenue of £3.75 billion ($4.77 billion) from the US. Despite this stellar performance, Flutter’s shares declined over 10% in the last six months, driven by regulatory uncertainties in the UK and Australia.

These developments highlight Flutter’s increasing reliance on the US market, which saw a significant expansion in 2023 and should remain the company’s most important revenue driver. Sisal is another promising Flutter subsidiary, as its lottery business was a standout performer within the company’s international division, successfully tapping into growth markets.

Overseas Operations Remain Vital

Flutter Entertainment is preparing for a dual listing of its shares on the New York Stock Exchange starting 29 January 2024, contingent upon regulatory approvals. This move aligns with the company’s strategy as it revealed that over 30% of its Q3 2023 revenue stemmed from the burgeoning US market.

Conversely, the gambling giant’s imminent exit from the Dublin Stock Exchange should streamline its operations and minimize regulatory complexities. Flutter’s ordinary shares will stop trading on Euronext Dublin on 23 January 2024. However, the company will keep its listing on the London Stock Exchange, highlighting its substantial regional investments.

Analysts believe that favorable industry trends can further propel Flutter’s shares as it draws renewed interest from US investors. The company’s diverse, globe-spanning portfolio enables it to capitalize on new developments, delivering long-term and sustainable growth. While 2024 will undoubtedly present significant challenges for the broader industry, Flutter remains well-equipped to capitalize on its strengths.

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The leading gaming, hospitality and entertainment giant, MGM Resorts International, became a victim of a cyberattack back in September. At the time, the operator confirmed issues with bookings, hotel electronic doors, some slot machines, as well as other amenities. After the initial attack, MGM was able to recover and resume its operations while at the same time rejecting the option to pay ransom.

The cyberattack impacted MGM’s performance, resulting in a dip in its shares. Currently, the company’s stock trades in the $36 range. However, one analyst predicted a rebound and remained optimistic about MGM’s future performance, despite the devastating attack. As announced by CDC Gaming Reports, Carlo Santarelli, an analyst for Deutsche Bank, remains optimistic about MGM, explaining that the cyberattack only briefly impacted the company’s performance.

Speaking about the current stock, the analyst said it is “very cheap.” Yet, Deutsche Bank’s assessment of MGM’s target price stock remains high, decreasing slightly from $57 to $56. This assessment comes ahead of the release of the operator’s third quarter results which are expected on November 8, 2023, and takes into consideration the recent cyberattack.

Earlier this month, MGM confirmed it expects the impact of the cybersecurity issue to be reflected in its Q3 2023 earnings. At the time, the company estimated a reduction of approximately $100 million in adjusted EBITDAR for September. With that in mind, Santarelli explained: “The impact from one-time expenses related to the breach is expected to be less than $10 million in the third quarter, and we do not believe these expenses will be reflected in adjusted EBITDAR, as they are expected to be covered by insurance.”

Impact of Cyberattack Evident in September’s Results

The analyst spoke about the impact of the cyberattack on the third quarter results. Still, Santarelli said that the results in September were primarily impacted by the cyberattack but figures from July and August remained “essentially flat.”

While MGM’s performance was impacted last month with occupancy decreasing to 88%, lower than the 93% recorded for the corresponding period in 2022, performance this month is expected to be nearly on par. MGM is expected to report occupancy for October of 93%, slightly below the October 2022 result of 94%.

“The deceleration in the third quarter, however, was largely a result of September performance and we believe primarily relates to the cyber-security incident, as well as the reporting of GGR related to the incident.“

Carlo Santarelli, analyst for Deutsche Bank

Recently, another analyst predicted that MGM will quickly recover from the cyberattack. David Katz, an equity analyst predicted that the company’s stock is likely to rebound in the near future, hitting $69. Moreover, he explained that the cybersecurity issue isn’t likely to impact the business in the long term.

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Lawmakers in New Jersey are considering a smoking ban in Atlantic City’s casinos, and casino employees are hopeful that this change could become a reality later this year. 

CEASE Advocates for Smoke-Free Casinos Across States

Pete Naccarelli, a co-founder of CEASE, expressed confidence in the ongoing discussions with politicians in a statement for CDC Gaming Reports. Naccarelli mentioned that at present, 83 out of 120 members of the New Jersey General Assembly and Senate are in favor of bills aimed at removing the provision permitting smoking in casinos. However, he noted that despite this backing, the bills have not yet been presented for a vote.

The movement for smoke-free casinos is not limited to New Jersey alone. CEASE has expanded its reach to eight states, including Nevada, where a similar bill is under consideration. The organization’s efforts have gained momentum, with a formal committee hearing held on a bill to ban smoking in Pennsylvania casinos earlier this summer.

Meanwhile, in August, CEASE commended Mohegan Sun and Foxwoods Resort Casino for their decision to maintain a smoke-free environment on their casino floors. CEASE praised the move as evidence that smoking bans do not negatively impact casino profits. However, this stance faced opposition from Spectrum Gaming Group, which suggested that smokers might avoid casinos without smoking areas. Meanwhile, casinos in New Jersey disputed these claims, arguing that online gaming, not smoking bans, influenced their revenues.

Jennifer Rubolino, a table-game dealer at Rivers Pittsburgh, shared her experience, describing the smoke as “overwhelming.” She pointed out that the smoke not only affects employees but also seeps into non-smoking areas, causing health concerns for everyone. 

CEASE Hopes to Inspire Nationwide Movement for Clean Air in Casinos

The Centers for Disease Control and Prevention have long advocated for the elimination of smoking in public spaces, highlighting the health risks associated with secondhand smoke. CEASE members argue that the exemption of casino floors from clean-indoor laws contradicts the principles of a safe work environment.

CEASE’s push for a smoke-free environment has gained traction, with several tribal and commercial casinos voluntarily going smoke-free since the COVID-19 pandemic. Parx in Philadelphia, a leading casino in Pennsylvania, is one such example where the ban has not affected revenue negatively. Lamont White, another co-founder of CEASE, clarified that their protests are not against the casinos themselves but against state laws forcing workers and customers to endure smoke exposure.

White dismissed claims made by opponents, labeling them as outdated and unsubstantiated. CEASE members believe that by pushing for this change in Atlantic City, they can inspire other states to follow suit, ultimately creating a healthier and more comfortable environment for casino employees nationwide.

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MGM-owned operator LeoVegas has posted its Q1 results, reporting a difficult period for the company. The operators’ trading declined as the group recorded drops in several metrics.

LeoVegas posted total quarterly revenue of $101 million (converted to USD), which represents a slight decline of 4% from last year’s results. The company EBITDA, meanwhile, sunk further to a loss of $3.32 million in Q1 2023. Adjusted EBITDA for the period was a loss of $1.18 million, representing a margin of -1.2%.

Gross profit for the three months ended March 31 declined to $65.92 million. Meanwhile, the company also recorded an operating loss of almost $8.8 million – a sharp decline from last year’s positive results.

Operating expenses, meanwhile, doubled and reached almost $290 million. Luckily, the company was able to offset some of the negative impact by divesting its share in BeyondPlay to Bettor Capital for $2.04 million.

LeoVegas closed the quarter with $73 million in cash and cash equivalents – a decline of over $9 million from the results recorded at the end of Q1 2022.

The Operator Struggled in Q1 2023

LeoVegas’ declines are attributable to various headwinds, including a sharp increase in operating expenses and suboptimal performance in certain markets.

Germany’s tight regulatory regime, for example, consistently undermined the operator’s profitability, resulting in serious losses. The Nordics, LeoVegas’ home market, didn’t make things easier for the company either. Its local revenues waned but the group continues to be optimistic about the market’s potential.

The United Kingdom and Spain were profitable markets for the company, helping LeoVegas record increased net gaming revenue from the Rest of Europe region. Despite the setbacks, the company experienced a 17% growth in the region, attesting to its potential.

Still, Q1 remained a largely troubled period for the operator. LeoVegas noted that its business was negatively impacted by the macroeconomic conditions and unfavorable exchange rates. The company’s Rest of World business plummeted by 28%.

LeoVegas hopes that its upcoming initiatives will help it improve profitability. The company just launched the Expekt sports betting brand in Denmark and now hopes to capitalize on opportunities in the country.

At the beginning of this month, on the other hand, the operator acquired Push Gaming in the hopes of bolstering its international growth.

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GAN, a major NA B2B provider of iGaming technology provider and an International B2C operator of online sports betting, has published its Q1 2023 report, highlighting its performance during the three months ended March 31.

GAN reported total revenue of $35.1 million, representing a slight 6% year-on-year decrease. Both the B2B and B2C verticals were impacted by the decline, with the company posting $11.3 million B2B revenue and $23.9 million B2C revenue against $13.1 million and $24.4 million in Q1 2022, respectively.

GAN attributed the B2B decrease to a decrease in the company’s contractual revenue rates with its largest customer. The B2C segment, meanwhile, was negatively impacted by the shifting currency rates and the declining US dollar.

Meanwhile, GAN’s operating expenses increased from $29.9 million in Q1 2022 to $31 million in Q1 2023. Adjusted EBITDA plummeted to $39,000 from $3 million in Q1 2022.

Despite the many negatives, GAN reported a net income of $1.5 million in Q1 2023, far surpassing the $4.5 million net loss it recorded in Q1 2022. This was primarily driven by a gain attributable to an amendment of one of GAN’s Content Licensing Agreements.

GAN also reported $40.8 million in cash as of March 31, 2023, representing a noticeable decline from the $45.9 million in the prior year quarter.

Gan Is Optimistic about the Results

GAN’s CEO, Dermot Smurfit, commented on the matter, saying that the quarterly results are satisfactory in spite of the slight declines across the board. He said that the metrics remain encouraging and that GAN expects its strategy to pay off and improve its profitability in 2023.

According to Smurfit, GAN will now lean into its GAN Sports US subsidiary and will rely on select international B2C markets.

Smurfit noted that GAN is also progressing in its strategic alternatives review and is evaluating the opportunities it has to maximize shareholder value.

Our recent announcement and term loan transaction bolstered our financial position and allowed us to modify the conditions of our term loan, significantly reduce our interest expense, and strengthen our balance sheet.

Dermot Smurfit, CEO, GAN

Smurfit clarified that this transaction should be considered a key step in the broader company review process. According to him, it will allow his team to evaluate the available options from a stronger position.

The CEO concluded that GAN has been pleased with its strategic review so far. He promised that the company will provide updates as the process continues but noted that there is no timetable for its completion.

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888 Holdings’ FY22 results and Q1 2023 trading update showed strong performance in key verticals, but UK and Middle East compliance issues dampened performance in these jurisdictions. The William Hill acquisition was a significant investment that had a transformative effect on the group, substantially improving its 2023 prospects. Overall, 888’s leadership stood by its earlier estimates, projecting impressive growth by 2025.

Focusing on Growth Had Its Price

The global online gaming and entertainment company had a turbulent year, relentlessly pursuing growth opportunities at the cost of short-term profitability. The group’s yearly financial results reflected this approach as Adjusted EBITDA rose to £217.9 million ($272.52 million) for an 82% year-on-year improvement. Revenue likewise soared 74% compared to 2021, reaching £1.2 billion ($1.5 billion).

888’s acquisition of William Hill significantly impacted the company’s financials, contributing substantially to overall revenue. However, the purchase significantly impacted the group’s yearly earnings and was one of the primary factors behind the FY22 net loss of £120 million. Lord Mendelsohn remained confident the acquisition would pay significant future dividends.

The combination with William Hill… brought together two exceptional and complementary businesses to create one of the world’s leading betting and gaming businesses.

Lord Mendelsohn, 888 executive chair

The group’s expansion-minded strategy contributed to its rising debt, which reached £1.8 billion ($2.25 billion). The William Hill regulatory issues in the UK and compliance troubles in the Middle East posed further challenges, dampening growth in key jurisdictions. Rising inflation and ongoing global financial pressures meant that pro forma revenue actually decreased by 3% year-on-year to 1.85 billion ($2.31 billion).

888 Is in a Perfect Position to Capitalize on Its Investments

888’s leadership remarked that the FY22 financials matched their expectations, and their 2023 and 2025 estimates remained predominantly unchanged. Although the projected revenue will slightly decrease the following year, the group’s focus on sustainable revenue streams should bolster EBITDA and ensure lasting success. 888 remained confident that revenues could reach £2 billion by 2025, thanks to newly created synergies.

Our clear priorities of integration, market focus, and deleveraging give us confidence in our 2025 targets as we build a stronger and more sustainable business.

Lord Mendelsohn, 888 executive chair

A five-priority strategy outlined 888’s planned approach. The group will focus on fully integrating newly acquired businesses, developing profitable markets, and capitalizing on growth opportunities. 888 will also double down on maintaining its competitive advantage, investing in sustainable growth and steadily reducing adjusted net debt to EBITDA to below 3.5x.

Overall, 888 finds itself in a pivotal position where it needs to capitalize on its prior investments, consolidating its revenue streams. The company’s ability to adapt to changing market conditions will be instrumental in the coming years as the industry continues to evolve. 888 is well-positioned to remain a market leader, provided it follows through on its plans and can deal with rising challenges.

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