Summary
- PENN has gained a boost of momentum as Massachusetts is set to become the next state to legalize sports betting.
- The company is set to report its Q2 earnings on August 4th and we share our thoughts heading into the report.
- We are bullish on the stock with a sense that the company is well positioned to outperform market expectations.
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Penn National Gaming (NASDAQ:PENN) has faced a series of bad beats with shares losing three-quarters of their value from its 2021 high. The stock has been caught up in the broader market selloff facing a reset of expectations following some weaker-than-expected earnings compared to what was likely an environment of exuberance during the early stages of the pandemic. That being said, we highlight what are overall solid fundamentals and a positive outlook for a company that remains a leader in the emerging segment of online sports betting.
A positive development is a report that Massachusetts is moving forward with its sports betting framework that may be ready for the upcoming start of the NFL Pro Football season. Indeed, Penn National Gaming is well-positioned to capitalize on this new market adding a boost to its growth momentum. Ahead of its upcoming Q2 earnings report, we are bullish on PENN which offers a significant upside with room for the current rally to gain momentum.
Massachusetts Gaming Law
On August 1st it was announced that the Massachusetts state legislators reached an agreement on a bill to legalize professional and college sports betting. Under the bill, anyone at least 21 years old placing a wager in the state will be subject to a 15% tax on in-person wagers at casinos and a 20% rate on online betting. The state believes it will raise upwards of $60 to $65 million per year in revenue which was a selling point for the deal to go through to raise funds for budgetary items like education.
