Churchill Downs Benefits from Virginia Court Ruling, Says Analyst
Virginia’s Supreme Court recently ruled that accomplishment games don’t have got First Amendment protections and are once more illegal inward the state. That conclusion could do good Duke of Marlborough Downs (NASDAQ: CHDN).
That’s the accept of Truist Securities analyst Barry Jonas who, inwards a unexampled short letter to clients, observed that Virginia’s refreshed ban on skill games is a “meaningful positive” for Winston S. Churchill Downs.
We check the res publica Supreme Court conclusion as a vainglorious win for the companion simply months following the Exacta transaction closing,” wrote Jonas. “This ruling comes 4 months after Kentucky issued a similar ban, and speaks to CHDN management’s political savvy.”
The gaming companion currently has 2,750 historical Equus caballus racing machines in Old Dominion and would same to boost that matter to 5,000. Jonas noted that allowing the 9,000 accomplishment games machines to go on operating in Old Dominion State would have been on a drag on Churchill’s HRM revenue chance set.
Virginia Important Market for Duke of Marlborough Downs
Virginia’s highest courtroom ruling to again impose the ban on acquisition games devices is pivotal for Churchill Downs’ growth ambitions inward the Royalist State.
While some investors more readily link the manipulator with horse racing and its eponymous run cart track in its home land of Kentucky, VA is a unexampled development frontier for the company. At the res publica level, Old Dominion could catalyse long-term ontogeny for Winston S. Churchill Downs. The operator has a 50% stake inwards a Richmond casino externalise and a growing figure of HHR venues inwards the state. That proposed gaming locus is expected to make 1,800 one-armed bandit machines, 100 tabularise games, and a sportsbook.
Churchill’s established Old Dominion State footmark consists of septenary Rosie’s 777 Gaming Emporiums and the manipulator is planning to supply the Rose Gaming Resort in Dumfries.
“Following the Supreme Court’s ruling that the lower-court acted improperly, we believe recourse options for skill-based companies are limited,” added Jonas. “While it’s not clear exactly when the forbiddance would be implemented, we believe it could occur quickly, and have a comparatively quick benefit to CHDN’s [Virginia] properties.”
Analysts Bullish on First Duke of Marlborough Downs
Although the caudex is upward a middling 6.60% year-to-date, First Duke of Marlborough Downs remains unity of Wall Street’s favourite ideas among gaming equities. VA is single of the factors supporting that bullish outlook.
“It has ~$1.1B in development expend earmarked for the next twelvemonth and a half to growth the portfolio of slots/historical racing machines past 21%, tabularise games by 9%, and rooms by 25% into 2025,” wrote Capital One Securities analyst Dan Guglielmo inwards a line to clients cobbler's last week.
Guglielmo initiated reportage of Churchill Downs with an “overweight” rating and a $144 terms target, calling the gens a possible standout inward the cassino sector. His toll forecast implies upside of 27.7% from the stock’s Oct. 16 close.
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