JMP: Florida TAM could be $700m less under single licence model
Jordan Bender at JMP Securities insists limiting the market to just Hard Rock Digital could hamper market from reaching its true potential
JMP Securities analyst Jordan Bender has forecast a Hard Rock Digital monopoly in Florida could result in up to $700m in lost revenue as the market fully matures.
The note, which was shared across social media, predicted that should Hard Rock Digital fend off sports betting rivals from entering the Sunshine State, it would limit the total addressable market (TAM) in the future.
JMP Securities said it predicts Florida will generate between $1.3bn and $1.5bn in gaming revenue at maturity, compared to $2bn if the market was opened up to competition.
In his note, Bender said: “States that have gone the route of one to three licenses, including Oregon, Connecticut and Rhode Island, have underperformed the average per-adult-spend across the United States with a core reason being less incentive to invest in players and the product with no competition.”
Currently, the Seminoles, who own Hard Rock Digital, have a Class III Compact with the Florida State government, which grants the tribe exclusive rights to sports betting in the state. Under the terms of that accord, the Seminole Tribe has to pay $500m to the state every year.
In his analysis, Bender used New York as a comparison to Florida given the pair’s similar population sizes and income per capita.
New York is subject to 51% tax rate, although Bender noted companies have been creating “higher levels of revenue that we would not expect to see in Florida” despite this fact.
Bender noted that the operator has struggled to gain a major foothold in any of the states it currently operates, citing its technology and product offering not being “on par with the top online companies”.
However, Bender did add that Playtech’s involvement with the operator could see it make gains in this space.
He added “Playtech, the world’s largest online gambling software supplier, recently took a 5% stake in Hard Rock, offering its technology capabilities.
“Improvement around the Hard Rock technology would take time, but could be the starting point to improving its underlying product for Florida and the seven states it currently operates in.”
Hard Rock Digital and the Seminole Tribe is currently embroiled in a long-running legal battle over its right to offer sports betting in Florida.