Game On: 3 Sports Betting Stocks Ready for a Fall Surge

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Americans’ fondness for gambling is evident as a record 50 million engaged in Super Bowl wagers, spending $16 billion!

The 2023 Super Bowl betting surged 61% year over year (YOY), fueled by expanding online platforms. Recent additions of North Carolina and Vermont bring the total states with legalized sports gambling to 37.

Canada’s nationwide legalization of sports betting contributes to industry growth. As more U.S. states legalize online betting, the gambling market is set to expand dramatically. Research and Markets projects online sports gambling to exceed $150 billion annually by 2030, presenting a substantial opportunity for investors.

Consider these three stocks to tap into the rising online gambling trend.

MGM Resorts International (MGM)

MGM Resorts (NYSE:MGM) has displayed commendable performance. Its stock has surged 50% this year and a total of 60% over a year. The rebound is attributed to the reopening of its Las Vegas and Atlantic City casinos after pandemic-related closures. Additionally, the expansion into online gaming contributes to the stock’s rise.

The company’s earnings per share surged to 59 cents, up impressively from last year’s 4 cents. Much of these gains for MGM come from the company’s online betting segment and Macau. BetMGM saw Q1 net gaming revenue soar 76% to $476 million. It achieved positive EBITDA in Q2 and expects H2 profitability. Additionally, its China MGM’s casino revenue surged 454% year over year to $670 million last quarter.

MGM revealed BetMGM’s UK expansion on Aug. 17. This signifies global growth beyond U.S. states, potentially boosting profits. Recently, MGM partnered with Marriott (NYSE:MAR), offering customer acquisition potential and a roadmap toward continued growth over the medium-term. I think this is a stock with plenty of growth potential on the horizon, and investors should take note.

DraftKings (DKNG)

DraftKings (NASDAQ:DKNG) stock remains strong after a robust Q2 report. Monthly users increased 44%, beating loss per share estimates, and surpassing Q2 revenue forecasts by $112 million at $875 million.

Argus analysts raised their price target on DKNG stock to $34 from $30, rating it strong “buy”. Truist upgraded to “buy” with a $44 target. A number of high-profile analysts have highlighted the company’s progress in terms of its path toward profitability, considering DraftKings’ impressive Q2. Revenue surged 88% to $875 million, driven by customer growth and product innovation. The company’s second quarter earnings per share beat estimates by 28 cents, coming in at 14 cents. Additionally, monthly unique payers increased 44% YOY to 2.1 million.

Notably, BlackRock purchased 2.3 million shares of DKNG stock, D.E. Shaw acquired 2.6 million shares, and Invesco added 2.88 million shares. Investment advisor Whale Rock, owned by Alex Sacerdote, bought 8.12 million DKNG shares. On Aug. 8, Truist upgraded DKNG stock to “buy,” praising its top-line gaming performance. Thus, plenty of institutional investors are either betting big or upgrading their guidance on this stock, given its strong outperformance and its growth trajectory ahead.

Caesars Entertainment Inc (CZR)

Caesars Entertainment (NASDAQ:CZR) is a notable name in the hotel-casino sector. Despite 7% gains since January, it dropped nearly 11% in a year. Caesars might intrigue adventurous investors due to travel demand, especially from young consumers. While financial confidence lacks, CZR stock has displayed solid growth with a 16.5% three-year sales growth rate (top 88.33% in the travel and hospitality sector) and a 6.3% growth rate in terms of bookings.

Caesars benefits directly from Vegas traffic and its growing Caesars Sportsbook app. It’s aligning with NFL, renaming Superdome and partnering with ESPN and CBS Sports for exclusive odds during football season. The company’s sports betting app has also expanded to Canada and Puerto Rico. Because the company’s recent earnings are exceptional, I expect this growth trajectory to continue into the fall season.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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