The shares of companies that offer online sports gambling have been on a tear ahead of Sunday’s Super Bowl, which is expected to book a record amount of legal wagers.
After a meteoric rally last year, DraftKings Inc. and Penn National Gaming Inc. have continued to surge as cooped up Americans look to bet on sports in place of traditional in-person entertainment events. They have each rallied more than 35% this year, while the S&P 500 Index has gained about 3%.
The Super Bowl will be the first time users in states like Colorado, Illinois, Michigan and Virginia can lawfully bet on the game — and that’s something industry experts see as a key driver for these companies.
“This year’s Super Bowl is expected to generate the largest single-event legal handle in American sports betting history,” said Bill Miller, American Gaming Association’s chief executive. More than 23 million Americans are expected to bet a total of $4.3 billion on Sunday’s game alone, AGA’s research shows. That includes a record 7.6 million who will use online sportsbooks like those offered by DraftKings or Flutter Entertainment Plc’s FanDuel.
Part of that excitement will reach beyond which team will hoist the Vince Lombardi Trophy. Sportsbooks have increased the number of prop bets that are geared toward less traditional fans. Casual and core gamblers can bet on which color Gatorade will be dumped on the winning coach or whether a team completes a scoring drive in less time than the time it takes for the National Anthem to be sung.
“There are things to bet on if you’re into the game, like who will score the first touchdown, who will win MVP,” DraftKings Chief Executive Officer Jason Robins said in a phone interview. “And things where you don’t have to know anything about the game, like the coin toss or the color of the Gatorade. We’re trying to create something for everybody.”
Investor enthusiasm has spread across the world over the past year and can be seen with stock rallies not only in household U.S. companies like DraftKings and Penn National. Dublin-based Flutter Entertainment Plc has gained more than 60%, while Toronto-based Score Media and Gaming Inc., which operates via its U.S. Betting app theScore Bet, has gained 340%.
The Roundhill Sports Betting & iGaming exchange-traded fund (ticker BETZ), the only sports betting and iGaming ETF, is up 84% since its June debut. More than 85% of members on the ETF, commonly-known by its ticker BETZ, are trading higher by at least 20% over the past year with almost half of the stocks having doubled over that stretch.
“Sports betting has taken off like a rocket ship and is only getting started,” says industry analyst and former American Gaming Association official Sara Slane.
—With assistance from Janet Freund and Michael Bellusci.
This article was provided by Bloomberg News.