DraftKings' US revenue dash on Wall Street Bets, with a focus on the impact in Las Vegas Strip and Macau gambling hubs.

In the recent week ending December 28, the U.S. hospitality industry faced a setback with a decrease in revenue per available room (RevPAR) by 6.5 percent year-over-year, according to analyst C. Patrick Scholes of Truist Securities. The primary cause of this decline was the calendar shift of Christmas to a Wednesday in 2024, moving it from a Monday in 2023, and the impact of Hanukkah falling on the 25th. Major holidays that fall on a Wednesday are known to disrupt demand, even for limited group and business travel during Christmas week.

Analyst David Katz of Jefferies looked at prospects for Las Vegas properties, notably Caesars and MGM Resorts. Katz believes that both companies need to execute better to fully capitalize on their digital pivot. However, he also forecasts a return to 2019 levels for Macau properties by 2026 due to recent government economic stimulus announcements.

In a positive development, stronger than expected sports outcomes in November drove an 11.6% industry hold rate for the month in states that have reported data. This offset some of the impact on RevPAR.

In the online gaming sector, DraftKings faced a similar challenge. Analyst Joseph Greff of J.P. Morgan revised his 2025 outlook for DraftKings' 4th quarter net revenue and EBITDA. The revised net revenue estimate is now $1.375 billion, down from the previous $1.525 billion. This low hold impact is similar to the $250 million/$175 million revenue/EBITDA impact DraftKings mentioned for October on its 3Q24 earnings call.

Despite these challenges, there are bright spots in the industry. Wynn Las Vegas is highlighted for executing superbly, with overlooked domestic resources and global projects. Both Caesars and MGM Resorts are considered too inexpensive to ignore, with valuations at 6.8x and 6.2x, respectively.

In the case of DraftKings, the weekly data from New York indicates a 7.0% OSB hold rate for the company, which is roughly in-line with DraftKings's New York OSB hold rate in October. Favorites, multi-game parlays, and other bets heavily backed by the public won at a higher than normal rate in December, but the impact on DraftKings's performance was mitigated.

In conclusion, while the U.S. hospitality and gaming industry faced challenges in the recent period, there are signs of resilience and potential for growth. The industry will continue to navigate calendar shifts, sports outcomes, and digital pivots to maintain and improve performance.

DraftKings' US revenue dash on Wall Street Bets, with a focus on the impact in Las Vegas Strip and Macau gambling hubs.