The Thanksgiving holiday weekend is expected to see sports betting records fall during an active four-day period of football action that includes the first-ever Black Friday NFL game and classic college rivalry games such as Michigan vs. Ohio State and Alabama vs. Auburn. Ahead of the blitz of football games, the highly-publicized launch of Penn Entertainment’s (PENN) ESPN Bet has stoked even more interest in sports betting apps. Notably, sports betting downloads rose by 237% year-over-year to 1.6M users during week 11 of the NFL season. ESPN Bet led the charge with 1.1M downloads, while Flutter Entertainment’s (OTCPK:PDYPY) FanDuel (OTCPK:PDYPY) and DraftKings (NASDAQ:DKNG) both saw more than 130K downloads for the week. BetMGM ranked fourth in downloads, followed by Caesars Sportsbook (CZR), Bet365, Fanatics/PointsBet (OTCQX:PBTHF), BetRivers (RSI), and BallyBet (BALY).
Sports betting operators are already looking at 2023 as a landmark year in the business following data from the American Gaming Association that showed Americans bet $23B on sports during Q3, a tally that was 32.7% higher than a year ago. The industry is also well on pace to hit an unprecedented $100B in total sports betting handle for the year, per the AGA. The accelerating growth during the back half of the year is due to a large part to states such as Massachusetts, Maryland, Nebraska, and Ohio that have either introduced or expanded legal sports wagering this year. Sports betting revenue for operators is also growing rapidly, with Q3 revenue reached up 22.8% year-over-year to $2.15B and YTD revenue 51% higher through September 30. “The notable rise in betting volume, surpassing revenue growth, hints at an evolving, engaged betting community,” stated U.S. sports betting analyst Matt Speakman. Looking ahead, the growth of Fanatics (FANA) is seen as one of the bigger wildcards in the sports betting sector. The company launched sportsbooks in Virginia and West Virginia over the last few weeks, and is pushing ahead with plans for an IPO that could throw a new spotlight on the OSB sector.
What about the performance of sports betting stocks? Pure-play DraftKings (DKNG) is up more than 160% over the last 52 weeks as the Boston-based company’s push toward profitability drew investors back in. Sports betting is only a small part of the picture for MGM Resorts International (MGM) and Caesars Entertainment, but both stocks are up more than 10% on a year-to-date basis. Data trackers Sportradar (SRAD) and Genius Sports (GENI) have both rallied in the last six weeks on improved sentiment. Global sports betting operator Entain (OTCPK:GMVHF) is down sharply over the last three months due in part to unexpected regulatory challenges in Australia and Brazil.
On Wall Street, Morgan Stanley warned near-term margins could feel some pressure from ramping promotions from several existing and newer businesses (BetMGM, ESPN Bet, Fanatics) looking to reinvigorate share and narrow the competitive moat vs. market leaders. “However, the results of 2023 suggest that permanent inroads may be more challenging as share leaders have been able to create a flywheel where increasing market share and win rates have provided firepower to reinvest in product and promotion,” observed analyst Stephen Grambling. While some market share choppiness is expected over the next 12-18 months, Morgan Stanley’s long-term view of the overall market share dynamics is largely unchanged with FanDuel (OTCPK:PDYPY) and DraftKings (DKNG) seen being at the top – followed by BetMGM, Caesars Sportsbook and ESPN Bet. Even if DraftKings (DKNG) and Fanduel (OTCPK:PDYPY) lose some market share to the new entrants, both are tipped to be the clear market leaders in Morgan Stanley’s framework.
Meanwhile, Seeking Alpha analyst Howard Jay Klein has his eyes on the recent dip in Flutter Entertainment (OTCPK:PDYPY). While the company suffered a bout of bad luck in the U.S. with its Q3 hold rate, Klein thinks the hold rate will normalize and sees the company’s planned New York Stock Exchange listing in 2024 as a potential share price catalyst.
Sports betting records could be carved up Thanksgiving weekend – watch these stocks
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