Best Sports Betting Shares to Invest In
Across the U.S., state lawmakers are creating regulations to allow people to bet on sports legally. As the market grows, sports betting stocks are amongst the hottest available. For those looking towards investment in sports betting companies, there is plenty to be excited about. Industry insiders predict market growth will continue to spur good stock opportunities in the coming years.
While most insiders point to the ongoing expansion of sports betting and accompanying markets, few analysts can put the finger on the exact potential of the industry. Sure, we know it is going to get very big, but estimating where the sports betting market can go is a challenge. As such, there are plenty of conflicting estimates coming out of the investment community.
Gabelli Securities and Census Bureau thinks it has the answer. In a study, the bureau forecasts U.S. sports betting revenues will increase from $2.1 billion in 2021 to $10.1 billion in 2028.
However, other Wall Street analysts think this number undersells the potential of the sports betting market. For example, Morgan Stanley thinks $15 billion annual revenue by 2025 is possible, while Macquarie predicts a market of $30 billion by 2030.
Whichever estimate is correct, it is clear sports betting is a market to watch, and consumers will increasingly embrace it over the next decade:
“Every play and move in sports entails an outcome that can be bet on,” says Luke Lloyd, a wealth advisor and investment strategist at Strategic Wealth Partners. “Sports betting allows people to be more engaged in the game, specifically every play, usually making it more fun and entertaining to watch.”
According to Lloyd, fantasy sports play a pivotal role in promoting sports betting, especially to younger consumers. He adds sports betting companies will reap long-term rewards as more states in the U.S. legalize gambling.
So, it is clear investors should be interested in sports betting stocks in the coming years, but which stocks are the best? In the following article, we will look at the nine top sports betting stocks currently available on the market. All of our picks give investors the chance to make gains on sportsbook companies.
DraftKings (DKNG) is probably the most famous of all sports betting companies in the United States. Its’ position as a good stock investment reflects both its popularity and strong growth performance. It also remains a relatively young share to invest in after first going public in 2019. Since reverse merging with a special purpose acquisition company (SPAC) in 2020, DraftKings has seen its share jump over 200%.
So, why has DKNG remained a strong stock over a year after that reverse merger? Well, a lot has to do with the online gaming industry being a generally hot ticket at the moment, with DraftKings one of the big brands in that market. Analysts tend to agree, and most think DKNG is a good option for those investing in sports betting.
S&P Global Market Intelligence has 27 analysts tracking DraftKings, and 15 think shares in the company are a Strong Buy. Four rank DKNG as a Buy, with eight being more cautions but still call it a Hold. None are encouraging shareholders to Sell.
Post SPAC merger, DraftKings stock continues to perform to expectations and is seeking other significant acquisitions to continue to be an appealing buy. For example, DraftKings became a betting partner of the NFL for the 2021/2022 season. As part of the collaboration, the company will work directly with the NFL to develop free-to-play games.
In August 2021, DraftKings further expanded its reach into the U.S. sports betting market by buying Golden Nugget Online Gaming (GNOG) for $1.56 billion in an all-stock deal. This transaction gives the company access to over 5 million customers who use Golden Nugget iGaming content. DraftKings says the acquisition will be finalized in 2022.
As more states embrace sports betting, DraftKings has been amongst the first to expand into new markets. This was emphasized in September 2020 when the company entered Arizona when the state finalized its online legal sports betting legislation. This was the 14th state DraftKings became available in, debuting its mobile sportsbook for Arizonans.
It is worth noting the DKNG also rolled out its daily fantasy sports platform in Arizona, the 44th state to get the product.
Flutter Entertainment (PDYPY) will already be familiar to many sports fans across the U.S. The company’s FanDuel subsidiary works directly with the NFL as a fantasy sports partner. Former FanDuel CEO Matt King described how the partnership showed how powerful sports betting could become across major sports.
“On Superbowl Sunday, we got a glimpse at how powerful the combination of the NFL’s excitement and our platform can be in delivering an enhanced fan experience,” King said when announcing the collaboration. “We are delighted to make that combination official by pairing America’s #1 sportsbook with America’s #1 sports league.”
FanDeul has expanded its reach across the U.S. sports betting market by merging with Irish betting group Paddy Power Betfair in recent years. The group now known as Flutter Entertainment put $158 million alongside its U.S. assets to acquire the FanDuel fantasy sports platform. In the merger, Paddy Power shareholders received 61% of the new FanDuel group, which is now Flutter Entertainment’s U.S. operations.
Despite becoming Flutter Entertainment, Paddy Power Betfair retains its PDYPY ticker on the stock market. As of 2021, Flutter has operations in 10 states, providing sports betting, covering 31% of the market. While it leads the market in states like Pennsylvania and New Jersey, it also has room to expand into other states.
Churchill Downs (CHDN) was severely impacted by the COVID-19 pandemic but somehow weathered the storm. Not just that, the company’s stock continued to perform well, showing it to be a resilient investment.
Home of the Kentucky Derby, the racetrack endured a touch in 2020. Like any spectator venue, Churchill Downs was effectively shut down during the pandemic. The 2020 Kentucky Derby was removed from its traditional May run, meaning it was not the first race of the Triple Crown. While the postponed event was eventually run in September, the 147th Kentucky Derby went ahead without spectators.
As the pandemic eased in 2021, the 148TH Kentucky Derby returned to its slot on the first Saturday of May. Spectators were even allowed back in, although at a capacity of 51,838. While that was the biggest sporting attendance since the pandemic began, it was well below the 150,729 people who saw the 2019 Derby.
So, through much of the last 18 months, Churchill Downs has lost its primary revenue stream. However, the company continues to post solid returns of 16.5% in 2021. While that is lower than the 18.3% average return for the U.S. market, it is still excellent, all things considered. In other words, Churchill Downs remains a rock-solid investment that delivers good returns.
As normalcy returns, we can expect those returns to get better. Churchill Downs is historically one of the best investment returns, with an annualized total return of 32.8%.
Live horse racing at Churchill Downs has not delivered the company’s solid performance, so what has? Well, embracing the online horse racing wagering market by partnering with TwinSpires.com and teaming with BetAmerica for online sports betting did the trick. As well as online sports wagering, Churchill Downs also has operations in eight land-based casinos.
Despite the woes of the pandemic, the group got second quarter (Q2, 2021) revenue of $515 million (up 178%), a record for the company. Yes, this is perhaps the most resilient sports betting stock you can find.
Penn National Gaming
Penn National Gaming (PENN) is a gambling giant making successful forays into the sports betting market. As such, now could be a good time to invest as the company targets growth across new markets.
Yes, Penn National Gaming is best known for racing and 43 gaming products across 20 states, but it also shows a pathway to sports betting expansion. This move into a thriving hot new market has generated plenty of excitement amongst analysts and investors.
Furthering its desire to be a leader in the growing sports betting market, Penn snapped up Score Media and Gaming (SCR) for $2 billion in September 2021. The deal allows the company to accelerate its push into digital gambling and gaming information. Score Media is a notable name in online game scoring, data, and news and will increase Penn’s exposure in the market.
While Score Media does not have the brand appeal of ESPN or Bleacher Report, it has shown it has an enormous appeal to users. In fact, the 113 minutes per month average users spend reading content is significantly higher than its rivals.
Like other established gambling brands, Penn National’s method for breaking into sports betting involves acquisition and collaboration. Purchasing 36% of sports media company Barstool Sports in 2020 signaled Penn’s intentions in becoming a player in the sports betting market. Share interest increased when Penn revealed it would operate the Barstool Sportsbook online betting app in 10 states before the end of 2021.
On the brick-and-mortar side of the sportsbook industry, Penn opened the Hollywood Casino York in Pennsylvania. At the cost of $120, the casino opened in August 2021 with 500 slots and 24 tables games. Despite being Penn’s 43rd gambling venue in the U.S.., the 80,000 square-foot casino includes the first-ever land-based Barstool Sportsbook site.
Of course, Caesars (CZR) is a name associated with the broader gambling world, but the company has been making increasing in-roads to sports betting. In July 2020, Eldorado Resorts bought Caesars Entertainment in a $17 billion deal that became one of the biggest gambling mergers in history. One of the largest gaming brands in the world, Caesars is now looking to a future of innovative products.
“Together, we will have an extremely powerful suite of iconic gaming and entertainment brands,” Eldorado CEO Tom Reeg said during the announcement in 2019, “as well as valuable strategic alliances with industry leaders in sports betting and online gaming.”
The merger means the company now holds 49 casinos across 16 states, covering 46,200 hotel rooms, 3,000 table games, 55,300 electronic gambling machines (slots and video poker), and an increasing interest in sports wagering. Indeed, Caesars is one of the most prominent land-based sportsbook operators in the U.S., with sports betting available across 17 states.
In April 2021, the company expanded its reach by purchasing William Hill, one of the UK’s largest online and physical sports betting brands. While the deal cost Caesars Entertainment $4 billion, it provides more options for increasing online sports betting products for customers.
Like Caesars, MGM is another Vegas name that is widely known for its land-based resort casinos. MGM Resorts (MGM) is also making strides in the sportsbook market. Instead of developing its own sportsbook platform, MGM partners with Entain (formerly GVC Holding). The two companies launched an online sports betting portal known as BetMGM in 2019.
New Jersey was the first market to get BetMGM, while Nevada soon followed. Today, the mobile sports betting platform is available in 13 states. For land-based sportsbooks, MGM has operations in five states. The company says expansion plans are underway for other states.
For example, Arizona became the latest MGM Resorts sportsbook market in September 2021. MGM took an innovative approach when entering the state and will launch a first-of-its-kind sports betting operation in State Farm Stadium, the home of the Arizona Cardinals. That sportsbook will open in 2022, in time for the 2022/2023 season.
MGM Resorts remains a solid buy for investors, especially if you have one eye on its sports betting operation. BetMGM continues to represent solid growth potential, with $178 million in revenue for 2020. Impressive, but analysts predict 2021 will be even better, with an estimated $1 billion in revenue. The only way is up, but BetMGM is currently a loss-making business as it seeks growth. MGM Resorts says the division will become profitable in 2023.
Rush Street Interactive
Rush Street Interactive (RSI) is a new stock that is piquing the attention of investors. The company went public in December 2020 through a merger with a SPAC and dMY Technology Group. It is worth noting that shares in the company have since fallen by over 10%. However, the outlook around RSI shares remains positive.
Sports betting has so far failed to deliver stock gains for shareholders. Still, Rush Street Interactive continues to perform well, including an 89% year-on-year second-quarter revenue to $122.8 million. Net losses have been slashed considerably, down from $63.5 million to $14 million during the same Q2 period.
RSI is tracking for $489 million in year-end revenue, an increase of 72% year-on-year. Chad Beynon, an analyst for Macquarie, says Rush Street chares are running at Outperform (Buy).
“As a relative pure-play and early market share leader in the U.S. iGaming space, Rush Street Interactive is well-positioned for continued growth from the burgeoning North American iGaming and online sports betting (OSB) market,” the analyst told clients in an analysis note.
As RSI continues to explore and expand in the sports betting market, shares will likely pick up, and investors will be buoyed by strong revenue performance. Sure, this is a long-game investment, but it is one some buyers may be interested in getting into early.
Roundhill Sports Betting & iGaming ETF
The Roundhill Sports Betting & iGaming ETF (BETZ) is something of different investment. It tracks a group of stocks representing the Roundhill Sports Betting & iGaming Index, a collection of online and land-based sportsbooks companies.
This passive investment has been available since BETZ launched on the market in June 2020. There are 42 holdings in the portfolio, with the top 10 making up 44% of the total. It is worth noting some of the stocks are for companies we have listed here, such as DraftKings (4.8%).
If you value diverse stocks, BETZ is a solid buy because it has a good mix. For example, shares are held across multiple geographic locations, with the U.S. taking 36.8%, Malta 12.5%, and Australia 9.7%.
GAN (GAN) is also known as the GameAccount Network and is a leader in online iGaming software. It provides the software that underpins many online casinos in the U.S. and globally. From applications to real money games, UK-based GAN has been trading publicly since May 2020.
Shares in the company have been somewhat unpredictable, but it represents an affordable investment in the sports betting market. Since going public, GAN has had shared trading for as little as $10.60 or as high as $31.81. Either way, the company has been up to over 90% since making its IPO offering.
Despite a loss of 7 cents for each share during the second quarter, worse than analyst expectations, GAN has 24% better revenues yearly. While GAN shares could currently be seen as something of a “gamble,” the overall positivity around the sports betting market means the company could be worth a look.
Certainly, there are signs GAN will improve its position in sports wagering following its $175.9 million acquisition of iGaming software-as-a-service (SaaS) company Coolbet. The deal represented a logical merger for GAN, allowing it to put a foot in the integrated iGaming software market in the U.S. GAN is a share with traction and plenty of potential, so now is a good buying opportunity.
There are several reasons why sports betting is becoming an attractive investment. Perhaps the most significant reason is that the market is only just getting started.
One of the surprising facts about sports wagering in the U.S. is that the market is in its infancy. That is amazing considering the economy around sports and how much Americans love sport. Still, for decades states were held back from exploring sports or casino gambling by the Professional and Amateur Sports Protection Act (PASPA).
This federal law prevented states from creating laws and regulations to legalize gambling. States that already had gambling legislation before PASPA was omitted from the law, most notably Nevada. As Las Vegas grew into the gambling Mecca of the country, other states were locked behind the framework of PASPA.
Until 2018, when lawmakers decided to remove PASPA and give states the individual ability to create their own gambling legislation, while some states say they will not embrace sports betting, most wasted little time creating legal frameworks to introduce sportsbooks. By 2021, many states now have functioning land-based sportsbooks and are increasingly also adding online operations.
Industry experts believe that by the end of 2025, 96% of Americans will have access to sports betting online or at physical locations. Online gambling for sports and casinos is expected to generate $100 billion in revenue by 2023.
Sports betting is just getting started, and already companies are seeing massive market gains. Looking ahead across the decade, a steady trend of continued growth is all but assured. Americans have already shown they want sports betting, and companies are now delivering products to them. For investors, sports betting shares are increasingly becoming a sure bet.
Sugarhouse is owned by Rush Interactive, which is one of the most prominent providers of online sportsbook and casinos in the country. In 2016, SugarHouse launched it online casino in New Jersey, joined by its online sportsbook in 2018. Since then, it became a leading casino and sportsbook for Americans. Check out their fantastic bonuses, games and bets available, and see yourself why when it comes to casino and sports betting in the USA, Sugarhouse is a Powerhouse
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