Online sports betting stocks are poised for explosive growth. The industry took off like a rocket within a few years since the Supreme Court green-lit sports betting.
After its 2018 ruling, several legislatures have legalized sports betting in their states. Moreover, the sports media and sports leagues seem to be going all-in to support gambling, which represents a seismic shift in the business. With the proliferation of online sports betting, the sector should move even higher.
The sector is buzzing over New York’s approval of five major betting apps. The state legalized online sports betting at a highly opportune time, at just before the NFL playoffs. Estimates suggest that the delay in approval from the state’s legislatures has cost it over $1 billion in potential tax revenues from 2018.
Sports gambling companies made over $4 billion last year, and if states such as California legalize it this year, the market is set for exponential growth. Moreover, according to Mordor Intelligence, online sports betting companies will register an incredible 10.1% growth from 2019 to 2024. Additionally, Goldman Sachs projects the market to grow by a whopping 40%.
Online sports betting stocks are likely to be highly lucrative investments in the coming years. Here are a few needle-movers in the sector, which you should consider adding to your portfolio.
MGM Resorts (MGM)
MGM Resorts is one of the leading casino operators globally. With the pandemic wreaking havoc in the past couple of years, the sector’s going has been incredibly tough. However, with the crisis winding down, the company is back in business and has reinvented itself with its pivot to sports betting.
Specifically, with BetMGM, the company’s online sports betting platform has been doing exceedingly well of late. MGM has a 50/50 stake in the platform with U.K.-based gambling giant Entain. A recent update suggests that BetMGM has consistently hit its market share targets of 20% to 25% in the U.S. online gaming sector.
Moreover, its management states that it was the market leader in online gaming with an incredible 30% market share in the past quarter ending in November. The platform is live in 19 jurisdictions, and it plans to expand into Canada and Puerto Rico soon. Additionally, it anticipates reaching positive EBITDA by next year.
Though the platform currently forms a small portion of revenues, it could become a major growth catalyst for MGM.
DraftKings (DKNG)
DraftKings has established itself as a leading player in online gaming and online sports betting in North America. In the past year, its top line has surged over 150% from the prior-year period as it looks to expand into new territories.
Moreover, in every new state it enters, it achieves profitability within two to three years. DKNG stock is trading at a discount considering its massive growth runway ahead.
The platform is operational in 14 out of 50 U.S. states at this time, with more being added every year. It has done an incredible job of maximizing its revenues from its legalized states.
DraftKings seems to be just taking off as the U.S. market could be worth over $60 billion once it’s fully legalized. Therefore, it has a colossal opportunity ahead of which remains mostly untapped.
Penn National Gaming (PENN)
Penn National Gaming operates a highly diversified business in the gambling sector. It includes regional land-based casinos across various states and an online gaming component, with its ownership of the Barstool Sports platform. It continues to make incredible strides in mobile sports betting and has a long growth runway ahead.
Barstool Sports is the leading retail sportsbook across various markets and has been performing remarkably well of late. During the first three quarters of its latest fiscal year, Penn’s revenues from its online sportsbook and gambling services segment have risen 294% from the prior-year period.
With a foothold across several areas, Penn has the potential to expand into new markets and significantly expand its revenue base.
Originally published on InvestorPlace.com
