Sports betting and esports betting is a growing industry. With the coronavirus crisis continuing sports betting will experience a likely temporary stall but this gap will be fuelled by the growth in esports and esports betting.
Gambling operators who offer sports and esports betting will concentrate on their esports and online gaming offerings, potentially overcoming a blip in their revenue generation with spending and gambling on gaming. Indeed, esports and gaming is an industry that is thriving as people stay home in 2020. Verizon is reporting increases in online gaming activity of up to 75%. Esports betting sites like Unikrn and Luckbox are reporting unprecedented growth in esports betting activity. Luckbox, for example, saw betting revenue rise by 50% in February and March of 2020.
Coupled with demand and growth, gambling operators are finding new market opportunities and affirmation of their activities in the form of regulatory approvals for sports and esports betting. Nevada’s gambling regulators have now approved betting on Call of Duty, CS:GO, League of Legends, Dota 2, iRacing, and Overwatch including online-only events and tournaments perfectly acceptable in a time of physical distancing.
The US lifted a federal ban on sports betting in 2018. Many US states have now legalized sports betting and esports betting is increasingly positively regulated. As per US News around $13 billion worth of sports bets were placed in 2019. The Bank of America predicts that sports betting could be available to 50% of citizens by 2022, with 30% having access to mobile gaming. In addition, sports gambling could grow at as much as 32% CAGR in the next three years. As per Wholesale Investor and Luckbox, Esports betting is forecast to grow at a rate of 44% CAGR over a four-year period reaching a value of $17.2 billion by the end of 2020.
The long-term growth potential of sports and esports gambling and the short-term significant spike in esports betting coupled with a longer-term rise provides a viable opportunity for investors. Let us look at sports betting and esports gambling stocks worth watching and considering right now:
1. Caesars Entertainment Corporation
Pitched as one of the most geographically diverse US casino entertainment companies, by September 2019 Caesars was running sports betting in seven US states. As of April 23, 2020, the company’s stocks had achieved over 6% gains in the five prior trading sessions leading to bullish predictions for its shares. As per News Heater, in addition, Barron’s is reporting an online gambling boom amidst the coronavirus lockdown.
The value of Caesars stock has been steadily rising across April, from a price of $6.28 per share on April 3 to $8.87 on April 24. Many analysts predict the casino company’s share price to rise above $10 and some, like Credit Suisse give “outperform” ratings for Caesars and a target share price as high as $13.
Sports betting company DraftKings has just become publicly listed after its merger with Diamond Eagle Acquisition Corp and SBTech. Its first day of trading on April 24 saw stock price surges as high as 18% with its stock price settling at $19.35 at the close of trading, as per Market Watch.
DraftKings CEO Jason Robins expects sports betting demand to rebound after the coronavirus crisis. Despite a shortage of sports betting opportunities, DraftKings is offering new gambling opportunities. Its fantasy esports contests saw 50-fold growth in March and its allowing users to bet on simulated matches in games like Madden NFL, as per CNN Business.
3. Flutter Entertainment
Bookmaking holding company Flutter Entertainment was created out of the merger between Paddy Power and Betfair. Its stocks have been popular for some time, illustrated by a high price-to-earnings ratio for its shares. But, with the impact of the coronavirus it has canceled its 2020 stock dividend. It has furloughed staff too, but as per the Motley Fool is financing this without government help.
Flutter Entertainment also owns Sportsbet in Australia as well as the US’s FanDuel. It is due to merge shortly with the Canadian gambling giant The Stars Group (CSG). Across the first quarter of 2020, Flutter saw overall revenue up 16% to £547 million with sports betting up 13% to £407 million and gaming revenue up to £140 million.
4. LeoVegas AB
Sweden’s LeoVegas AB has seen a significant share price rise of over 20% in recent months. Some question whether the company is undervalued whilst other analysts argue this point. There is optimistic future growth but the stock price hike for LeoVegas may have already happened depleting the opportunity for new investors, as per Simply Wall St.
LeoVegas has a “Mobile First” strategy which could position it well for future growth as the global mobile gaming market grows. Its brands include Royal Panda, Pixel.bet, Bet UK, Crown Bingo, and Bingo Stars amongst others.
5. MGM Resorts International
Though MGM does have some reliance on the physical gambling mecca of Las Vegas and its casinos it did also see the opportunity of online betting early and could be a position to take advantage of a growing sports gambling market. Physical casino closures due to the coronavirus have impacted MGM and its stock price plummeted then recovered slightly, as per Motley Fool, as a result. MGM’s established brand and substantial financial resources mean that it could survive the current global crisis well and come out positively on the other side.
MGM partnered with GVC Holdings to develop its popular BetMGM mobile wagering application to take advantage of the increasing legalization of sports betting.
Morgan Stanley analyst Thomas Allen believes sports betting will be the biggest growth opportunity for the US gambling industry. Allen says legal sports betting revenue was less than $1 billion in 2019 but is expected to reach $7 billion by 2025. The illegal sports betting market is estimated at a size of around $150 billion.
If you’re unsure about investing in sports betting or esports betting stocks, take a look instead at some of the gaming and esports stocks worth watching in 2020.