KUALA LUMPUR: Genting Malaysia Bhd 's newly launched mobile sports betting app in New York may need to undergo a gestation period before it contributes meaningfully to the bottomline as it faces competition from more bigger and more well-established rivals.
Launching on March 3, Genting Malaysia's mobile sports betting app, named Resorts World Bet, is a late entrant to the New York scene as other operators started as early as January 8, said Hong Leong Investment Bank (HLIB) research.
This being the case, the research firm expects Genting Malaysia's New York subsidiary to spend heavily on advertising and continue to provide offers to players in order to entice their patronage.
At present, there is an uneven distribution of net gaming revenue (NGR) among the operators, with HLIB data revealing that market leader Caesars' NGR in January was 48 times that of BetRivers.
HLIB cited the reason being that Caesars has a higher hold percentage, is more well established and offers a more attractive promotion for new players compared to BetRivers.
In addition, it noted that New York has a high tax rate of 51% on gross gaming revenue, which takes a big bite out of NGR.
New York became the US's largest mobile sports betting market with US$1.67bil in mobile sports bets in January despite operating for only 24 days following its Jan 8 launch. However, the net gaming revenue came to only US$60.8mil or 3.6% of the figure due to the high tax.
"Due to these reasons, we expect that RWB will likely need to undergo a gestation period before it can contribute meaningfully to the bottom line of the group.
"Having said that, we are still positive on this development as it allows the group to tap into the robust and growing mobile sports betting market in the US, which could potentially pave the way for it to penetrate to other states in the future," said HLIB.
The research firm maintained its "buy" call on Genting Malaysia with an unchanged sum-of-parts target price of RM3.69.