The gambling industry is on the threshold of its future, poised between a flourishing yet complex environment evenly balanced with current and upcoming results. There are a few industries that have managed to grow as rapidly as the gambling industry. In the first months of the year, there have been several major events that include a failed buyout offer for 888 (888), resignation from ENT’s chief executive; and FLTR shares listed in New York issued by Flutter Entertainment Triton. In light of profit warnings and diminishing trading, this article aims to offer a comprehensive overview covering key trends that may affect share prices in 2024.
Drivers Of 2024 Price Share In Gambling
By the end of January 2024, some crucial factors have the potential to change gambling share prices in several months ahead.
Regulatory Considerations and Industry Trends
Regulatory settings and trends form the dynamic backdrop of the gambling industry. However, trading updates have recently shown difficulties including customer-oriented sports result headwinds of the third quarter to £45 million impacting Entain’s cash profits. Full-year revenue and cash profits of Flutter Entertainment and 888 are also likely to come in at the lower end for guidance, with revenues declining by ten percent.
As for the future, European regulatory issues and maintaining momentum in the US consumer market will be key themes. The sluggish M&A activity in 2023, which also includes the longer-term impact of elevated interest rates as well as regulatory headwinds is likely to recover and gain momentum again this year.
Legalizing online casinos in even more US states is also one of the key points that can impact industry trends and the growth of the market. For example, new Pennsylvania online casinos keep showing up, constantly expanding and engaging that market for record revenues. In 2023, Pennsylvania experienced a significant increase in gaming revenue, largely fueled by a 28% rise in iGaming revenue compared to the previous year. The total gaming revenue for 2023 was a record $5.7 billion, which is 9.3% higher than the $5.2 billion reported in 2022. This revenue includes earnings from slot machines, table games, sports wagering, iGaming, video gaming terminals, and fantasy contests. The tax revenue generated from these forms of gaming in 2023 also reached a record high of $2.34 billion, surpassing the $2.12 billion generated in 2022. The growth in iGaming revenue was particularly notable, with a nearly 28% increase, indicating a strong performance in the online casino sector in Pennsylvania for the year 2023.
If all other states follow the example above, we are in for even bigger growth of prices in the gambling shares sector.
Company Analysis: Major Players’ Financial Performance
A more focused analysis of the key players in this gambling industry will shed light on their financial performance and competitive standing.
In 2023, gambling tech business Playtech faced challenges, losing out to private equity-backed Lottomatica. Playtech shares have fallen by more than a fifth in the year to date when embroiled with Caliente Mexican sports betting business for a contract dispute. On the other hand, DraftKings, however, shares are up 232 % in the last year.
The rejection of the £708 million buy-out offer from Playtech by William Hill owner of 888 was announced in July, signalling a vibrant market with room for more developments. Since 80% of the shares have fallen since its peak in 2021, analysts from Numis argue that brand and tech would support significant merger synergies with another operator.
A long-running question in the gambling M&A space is whether Coral and Ladbrokes owner Entain’s partner, MGM Resorts International, will make another bid for their joint venture, betMGM. Possible recent developments at the helm of Entain’s board such as Jette Nygaard-Andersen’s resignation could further shape its future path.
The Outlook of Mergers and Acquisitions in 2024
The M&A scenario in the gambling industry took a plunge during 2023, which was mainly attributed to the increase of higher interest rates that negatively affected debt stacks and private equity interests. Further regulatory headwinds contributed to the muted activity, forcing most of these major players into a state of caution.
A noteworthy deal in 2023 was the online sports betting licensing agreement between Walt Disney Company-owned ESPN and Penn Entertainment. The companies hoped that ESPN Bet could threaten market share leaders in the United States. Gambling tech business Playtech faced a setback, losing out to private equity-backed Lottomatica in the acquisition hunt for Italian operator SKS365.
Signs of a pick up in business activity might emerge with the advent of the new year. Bank analyst Simon Davies predicts 2024 is a “leading up to another year of merger and acquisition activity” reported Deutsche’s have observed that the William Hill owner, a Scottish football pool operator became famous in August after rejecting £70million offer from Playtech. Recent reports also hinted at discussions between US gambling operator DraftKings and a potential bid from the shareholders of (DKNG) and 888. For all-share deals, DraftKings is a company that has such firepower as its shares are up by 232% this year.
However, Playtech’s shares have plummeted more than 25% year-to-date. The company is currently involved in a lawsuit with Mexican sports betting business, Caliente over contractual issues around their collaboration platform, Caliplay. However, market analysts predict that 888 will see more acquisition bids considering the significantly reduced share price.
Steering through 2024 with Caution and Hope
To summarize as we sail through the unsteady waves of ’24, gambling stands at a watershed. Share prices will depend on regulating factors, industry trends, and the performance of major players. Nonetheless, opportunities in strategic acquisitions and market upswings suggest that the environment is full of potential.
First, investors are encouraged to enter into the year with both some reservation and positivism monitoring regulatory changes as well as market behaviors. The industry of gambling, with its robust adaptability, may still return to display high share prices and this renewed confidence from investors as the year opens. Currently, the future is a mix of uncertainty and possibility which shapes this year’s narrative on gambling share price projections.
