Top sports betting stocks to watch.
Once the initial days of the coronavirus pandemic were in the rearview mirror, the sports betting industry came to life. As Americans found themselves stuck at home, idle hands eventually found their way to wagering. Since debuting in June 2020, the Roundhill Sports Betting & iGaming ETF (ticker: BETZ) is up 97%. Three years after a Supreme Court decision paved the way for any state to legalize sports betting, roughly half the U.S. population lives in such states, and that proportion is growing. With so much momentum behind the trend, here are six of the best sports betting stocks to watch.
DraftKings Inc. (DKNG)
DraftKings is arguably the most recognizable online sports betting brand, and it has the market value to match, with a valuation above $20 billion. Since the end of its first day of trading after going public via a special-purpose acquisition company in April 2020, the stock is up 165%. Analysts still can’t get enough of DKNG, with a consensus price target of $71.15 representing nearly 40% upside. The company has been making aggressive moves to shore up its position in the space, becoming the NFL’s sports betting partner, announcing the acquisition of Golden Nugget Online Gaming Inc. (GNOG) in August, and reportedly pursuing a $20 billion bid to buy Entain, a large sports betting company based in the U.K.
Flutter Entertainment (PDYPY, PDYPF)
The name of the parent company might not ring a bell, but at a market capitalization of $37 billion, Flutter Entertainment is the single most valuable sports betting company out there. Its portfolio of brands includes PokerStars, Paddy Power Betfair and the daily fantasy betting giant FanDuel. In fact, FanDuel is the single biggest competitor to DraftKings, and the company touts a 45% market share in the U.S. online sportsbook segment. Flutter acquired the parent company of PokerStars in 2020. But not counting that acquisition, the company still reported 28% revenue growth in the first half of 2021 from the same period a year before. With more states legalizing sports betting, the company expects to start cranking out positive earnings before interest, taxes, depreciation and amortization in 2023.
Penn National Gaming Inc. (PENN)
A more traditional gaming company than either of the first two names on this list, Penn National has a bricks-and-mortar presence in 20 states, where it operates slot machines, table games, and live sports betting and racing. PENN is quickly adapting to the brave new world of online sports betting, however, acquiring a 36% stake in lifestyle, media and digital sports company Barstool Sports in 2020 for $163 million. It quickly used the power of that brand, with a devoted audience of 66 million, to launch the Barstool Sportsbook app in Pennsylvania, Michigan and Illinois. Still anxious to expand its market share in online gaming, it announced the $2 billion acquisition of Score Media and Gaming in August, which will give PENN a strong foothold in the Canadian mobile sports betting market and make this stock an all-around bet on North American sports wagering.
Caesars Entertainment Inc. (CZR)
Are any of the biggest sports betting companies not on a buying spree? Consolidation is the name of the game in this industry, and Caesars has clearly gotten the memo. Caesars itself merged with Eldorado Resorts in an $18 billion deal in July 2020. Two months later, the combined company announced an agreement to buy U.K.-based bookmaker William Hill for $3.7 billion. In September, the company announced the sale of the non-U.S. assets of William Hill for about $3 billion, keeping its focus on the domestic sports betting market. The $23 billion Caesars is on the right track at the moment, exceeding analyst expectations in 2021 as the stock is up more than 40% year to date. The company is highly leveraged, a sword that cuts both ways, but analysts have quintupled their expectations for fiscal 2022 profits in the last five months alone.
Churchill Downs Inc. (CHDN)
At $9 billion, Churchill Downs is no small fry, but it is the least valuable company on this list. The company behind the famed Kentucky Derby, Churchill Downs is also the most tried-and-true member of this list, with corporate origins in 1928. CHDN is certainly more niche than its peers on this list, with its operations revolving around horse racing and the betting accompanying it. But the company also has casinos in eight states and operates one of the most profitable U.S. online sportsbooks, TwinSpires, which books wagers on all the major sports, as well as the horses. Up more than 20% in 2021, CHDN stock is on the comeback, logging record net revenues in the second quarter. Analysts expect earnings per share of $6.09 in 2021, up from 83 cents in 2020.
MGM Resorts International (MGM)
Casino powerhouse MGM, at $22 billion, also deserves a spot on this list. It recently announced the launch of its mobile sports betting app, BetMGM, in Wyoming, making it the 14th U.S. market to offer both mobile and online BetMGM experiences. In a sign of the market’s rapid consolidation, MGM may actually be able to nix DraftKings’ potential deal to acquire Entain. That’s because Entain has an exclusive partnership with MGM in the U.S. online sports betting market, where BetMGM is actually a 50-50 joint venture between MGM and Entain. As such, MGM may have the ability to prevent a competitor from muscling further into online sports betting — or could secure some other form of lucrative remuneration from DraftKings to waive the exclusive partnership. The stock has roughly doubled over the past year.
Best sports betting stocks to watch:
— DraftKings Inc. (DKNG)
— Flutter Entertainment (PDYPY, PDYPF)
— Penn National Gaming Inc. (PENN)
— Caesars Entertainment Inc. (CZR)
— Churchill Downs Inc. (CHDN)
— MGM Resorts International (MGM)
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Update 09/27/21: This story was originally published at an earlier date and has been updated with new information.