Are there sports betting stocks? I know you know what sports betting is, but do you know about investing in it? Sports betting is a global industry that’s only rapidly growing in the United States. In markets like Europe, sports betting has long been accepted as a part of the culture. Some estimate the market to be worth over $200 billion globally. The popularity of sports betting has surged since the introduction of online sportsbooks, especially when mobile sports betting is added.
In the United States, 30 50 states have legalized sports betting or recently passed a bill to legalize it. On top of that, 19 additional states have recently introduced a bill to legalize sports betting.
Most states have realized that gambling tax revenues can help boost the local economy. Brick-and-mortar casinos and sportsbooks also provide hundreds of job opportunities for residents.
You can also place bets at popular offshore sportsbooks. These operate in tax-friendly countries like Costa Rica or Malta. They’re strictly online gambling sites.
As investors, it’s an industry worth taking a look at. Any industry anticipated to grow at a 10-15% CAGR over the next decade should be on our investing radars.
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Sports betting is glamorized, like in many industries involving much money. Look at any professional sporting event and see sports betting or fantasy sports advertising everywhere. It’s not just Las Vegas or New Jersey anymore.
Every major casino has a sportsbook, and many of them have online sites as well. States like Illinois, Pennsylvania, Michigan, Tennessee, and Colorado all have full access to legal sports betting. The other major catalyst? Mobile sports betting.
Almost everything in our lives is on our smartphones these days, and now that includes online betting. You can place a bet from anywhere at any time, even during the game, where live betting is becoming increasingly popular. In Europe, live betting is more popular than pre-game betting. A few years ago, placing bets on your computer seemed cutting edge. Today, mobile betting is rapidly becoming the preferred method around the world.
1. DraftKings (NASDAQ: DKNG)
DraftKings is the global leader in daily fantasy sports and one of the largest American-based casino and sportsbook sites. Founded in 2012, DraftKings came public via a SPAC merger in 2020 and has returned nearly 500% to its investors since it started trading. After opening the DraftKings Sportsbook in New Jersey in 2018, DK became the first American company to offer legal online and mobile sports betting since the Supreme Court overturned the Professional and Amateur Sports Protection Act or PASPA.
Since then, DraftKings has opened brick-and-mortar operations in West Virginia, Indiana, Iowa, Illinois, and Pennsylvania. The Illinois location is built into the legendary Wrigley Field, where the Chicago Cubs play. DraftKings is the official sports betting and fantasy sports site of the MLB, the NFL, UFC, NASCAR, and nearly 50 individual franchises across all major North American sports leagues.
2. Penn Gaming (NASDAQ: PENN)
One of the biggest growth stock stories of the past couple of years, Penn went from a stock below $8.00 in March of 2020 to an all-time high of $142.00 per share just one year later. They operate over 40 different brick-and-mortar casinos and racetracks around the country.
But what pushed Penn over the edge and into the mainstream spotlight was when the company purchased a 36% stake in Barstool Sports in 2020. The partnership has reaped rewards for both sides, with Barstool becoming one of the biggest names in sports media.
Penn leveraged the Barstool brand and created Barstool Sportsbooks in several locations nationwide. It even created the Barstool Sports Betting app for mobile phones. Barstool Sports founder Dave Portnoy, or Stool Presidente, is a social media icon and has revitalized the Penn brand. I was making it one of the best sports betting stocks to buy.
3. MGM (NYSE: MGM)
A legacy brand established in 1986, a mainstay on the Las Vegas Strip. MGM owns dozens of locations worldwide in the U.S. and Canada and overseas gambling designations like Macau.
MGM also launched its exclusive online sports betting platform and app, BetMGM. The platform is available in Nevada, Colorado, Indiana, Iowa, Michigan, New Jersey, Pennsylvania, Tennessee, Virginia, West Virginia, and Washington DC.
BetMGM is the official sports betting site for several NFL and NBA franchises and Callaway-owned Top Golf.
4. Caesars (NASDAQ: CZR)
Another well-known brand out of Nevada is Caesars Entertainment. They are known for their Caesars Palace resorts and have a well-established sports betting segment.
Caesars launched the Caesars Sportsbook App for domestic bettors, and downloads have been soaring. How serious is Caesars about sports betting? It acquired the well-known overseas sportsbook brand William Hill for $3.69 billion.
Caesars has also pledged to spend over $1 billion on its online and mobile sports betting infrastructure. Most recently, Caesars has been in talks with ESPN to use its rights in a sports betting partnership. The Caesar Sportsbook App is already live in several states, and the company plans to do a full rollout to its home state of Nevada shortly.
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TV Streaming
FuboTV (NYSE: FUBO): This is a speculative play on sports betting, not a stock I believe in myself. Many others do, so don’t take my opinion as financial advice! FuboTV is a sports-centric streaming company trying to integrate a sports betting platform directly into the stream.
The company relies on monthly subscription fees like most other premium channels. It is similar to DAZN and ESPN+, although it’s a lower-quality presentation and overall experience.
The sports betting integration is interesting, but there are questions about how viable its business structure is. Why would people stream channels through FuboTV that they can get elsewhere for perhaps a lower-priced bundle? It’s a novel idea, but the future is probably in a company like ESPN or Amazon pulling this off in a more polished product.
What Will the Future Bring?
Sports betting is here to stay. That’s one thing we know for sure. As more states move towards legalizing it, the industry will continue to grow domestically.
How do I know for sure it’s going to get bigger? Because states like California and Texas haven’t even taken the first steps toward legalizing it. Sports Betting now is what we all wanted the Cannabis industry to be several years ago.
The future of sports betting is clearly on smartphones. These days, you can bet on nearly anything that happens in a game.
Players and team props allow you to bet on individual performances rather than the game’s outcome.
You can bet on what happens in a half or quarter. Bet in real-time, during the action, or even during the intermissions. These days, the betting possibilities are truly endless.
It’s hard to say how much more advanced the industry can get. Will we see it in the new Metaverse that everyone is talking about? In Augmented Reality?
Sports betting on the Blockchain? Only time will tell, but sports betting should continue getting more intricate and real as technology advances.
Final Thoughts: Sports Betting Stocks
Currently, the industry is dominated by a few companies. DraftKings, Penn National Gaming, MGM, and Caesars are just a few stocks you can invest in to get exposure. Legacy casino brands are implementing their own online and mobile sportsbooks.
Major media names like CBS and ESPN are getting involved in sports betting, not to mention nearly all of the major sports leagues in North America. With an industry with a long runway ahead and a nearly guaranteed high CAGR for the next decade, sports betting should be one of the bigger secular trends for investors.
At this point, the industry will only grow faster, so if you want to get exposure to these companies, I suggest acting sooner rather than later. As with anything, there are downsides to this industry. Gambling addiction can ruin lives, just like alcohol and other substances. If you know someone struggling with this, get them to help at the addiction center today.
