PlayAGS Announces Internet Slot Deal with DraftKings Casino
Posted on: February 6, 2023, 02:35h.
Last updated on: February 6, 2023, 03:26h.
Gaming device manufacturer PlayAGS (NYSE:AGS) announced today it reached an agreement with DraftKings (NASDAQ:DKNG) to supply the gaming company with content for its internet slot offerings.
Financial terms of the agreement weren’t disclosed. But the pact calls for PlayAGS to provide DraftKings with more than 20 of its proprietary slot titles for use on the latter’s internet casino platform, which is one of the largest in North America. In New Jersey — the largest iGaming market in the US — 10 PlayAGS titles are currently live on the DraftKings online casino.
Additional new titles are scheduled to go live in the months ahead, including the planned release of the highly acclaimed Golden Wins Deluxe game theme, which is nominated in the 5th Annual Eilers & Krejik Gaming (EKG) Slot Awards in the iGaming category for top-performing new online game,” according to a statement.
Las Vegas-based AGS is well-known for providing slot machines to land-based casinos throughout the US, including tribal venues.
For PlayAGS, ‘Considerable Accomplishment’
Not surprisingly, PlayAGS is bullish on the agreement with DraftKings.
“The launch of AGS’ real-money gaming (“RMG”) content on DraftKings Casino represents a considerable accomplishment for the Company,” said AGS Vice President Gary Hardy in the statement.
There’s merit to that positivity, because iGaming is one of the fastest-growing corners of the broader gaming industry. It requires less overhead than land-based casinos, and its margins are superior to those of online sports betting. Additionally, with just a handful of states currently allowing online casinos, internet gaming’s legislative growth runway is more attractive than that of sports betting.
New Jersey is one of six states that permit regulated online casino games. The others are Connecticut, Delaware, Michigan, Pennsylvania, and West Virginia.
While six is far fewer than the number allowing sports betting, the number of iGaming states is expected to increase in the years ahead as more states embrace new revenue-generating sources. There’s already speculation that Illinois, and perhaps Indiana, could be among the next states to permit regulated online casinos.
Analysts Bullish on PlayAGS
News of the agreement with DraftKings arrives as PlayAGS stock is in rally mode. Following a rough 2022, the shares are up 34.60% since the start of 2023, and some sell-side analysts are bullish on the slot machine maker this year.
“We see CY23E/CY24E market share gains and upside to consensus estimates due to its Spectra 43 cabinet launch, the top performing Portrait Upright, according to Eilers & Krejcik surveys, and entrance into new categories/segments of the floor, including mechanical reels, VLTs, WAPs and high-denomination games,” wrote B. Riley analyst David Bain in a recent report.
The analyst also highlighted AGS gaining licenses in several new states and the potential for gaming expansion in Texas as among the potential catalysts for the stock. He rates the gaming name “buy” with a $14 price target, implying it can more than double from current levels.
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