Nicolas Fonseca, CFA, ETF Product Analyst for VanEck Global
Super Bowl LIV was this past Sunday, and with it, sports betting had a winning day. The American Gaming Association estimated that $6.8 billion in bets were made on the game, between the Kansas City Chiefs and San Francisco 49ers.1 Sports betting has skyrocketed since May 14, 2018, when the U.S. government repealed the ban on sports gambling.
A Market with Great Expectations
The gambling market is huge, with up to $150 billion wagered illegally on sports every year in the U.S.2 According to Morgan Stanley analyst Thomas Allen, sports betting represents the biggest growth opportunity for the U.S. gambling industry in the coming years. He estimates that sports betting revenue will reach $7 billion by 2025, up from less than $1 billion in 2019. The total size of the sports betting market is estimated at $15 billion,3 assuming broad legalization occurs at the state level. So far, 20 states allow some form of sports betting with many more working on bills.
Drawing the Betting Lines: States that Have Allowed Legal Sports Wagering
Source: Morgan Stanley, The Action Network
From Backroom Bookies to Digital
Currently, the industry is focused on mobile platforms, as many bettors seem to prefer to wage on their smart device rather than in person. A number of gambling companies have made the move to New Jersey because of the state’s law allowing online gambling. Last year alone, $4.5 billion was wagered in sports betting in NJ, generating $300 million in revenues.4
Betting on Gaming
Just last week, Penn National Gaming agreed to buy a 36% stake in Barstool Sports for $136 million. Penn National will provide the infrastructure, and Barstool will bring its 66 million unique monthly visitors, with the vast majority ages 18-34. With the deal, Penn National will rebrand its retail approach as the “Barstool Sportsbook” with the idea of opening 20 retail locations by the end of 2020.5
Between the legalization of sports betting and improving technology, sports wagering is becoming more easily accessible to more bettors. We believe this will help drive growth in the U.S. gaming industry and create interesting investment opportunities.
1Source: American Gaming Association, “A Record 26 Million Americans Will Wager on Super Bowl LIV.”
2Source: American Gaming Association, “97% of Expected $10 Billion Wagered on March Madness to be bet Illegally.”
3Source: Barron’s, “Sports Gambling Will Be a Huge Opportunity. Bet on These Stocks.”
4Source: Action Network, “New Jersey 2019 Sports Betting Handle, Revenue, Taxes & More.”
5Source: Legal Sports Report, “Where The First Barstool Sportsbook In The United States Will Be Located.”
Please note that Van Eck Securities Corporation (an affiliated broker-dealer of Van Eck Associates Corporation) may offer investments products that invest in the asset class(es) or industries discussed herein.
This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
newETFs.io respects the hard work of others and gives all credit to the remarkable folks at ETFTrends.com. This excerpt/article was pulled from their RSS feed; click here to view the original. Please note that on occasion, the RSS feed will not have the author. When this happens this site defaults the author to "News". Make no mistake, this excerpt/article was not created by newETFs.io, it was simply shared with you.