Since 2018, one of the most compelling sectors for growth-oriented investors is the sports betting sector. That was the year the U.S. Supreme Court allowed states to legalize sports betting. Since then 30 states have taken that step including New York and New Jersey which are two key markets. In fact, the state of New York broke a record when it legalized online sports betting in January 2022.
This makes it a good time to consider investing in sports betting stocks. Many of these stocks are trading at significant discounts as part of the broad market sell-off. The reason for this is competition. There are a nearly endless number of online sportsbooks competing for consumer dollars.
And it would appear there's enough revenue to go around. According to Data Bridge Market Research, the global sports betting market is expected to grow at a compound annual growth rate of 10.26% between now and 2029.
With that said, sports betting stocks are definitely risk-on assets. And the payoff may be years away. But if you have time and have a tolerance for risk, here are seven sports betting stocks to consider for solid upside gains.
Quick Links
- DraftKings
- Bally’s
- Boyd Gaming
- Penn Entertainment
- Gan Limited
- FuboTV
- HOFV
#1 - DraftKings (NASDAQ:DKNG)
A key reason that DraftKings (NASDAQ:DKNG) is one of the leaders in the sports betting sector is the companies long list of partnerships. As of June 2022, the list includes: ESPN, the National Football League (NFL) and separate contracts with the New York Giants and Denver Broncos, Major League Baseball (MLB), the PGA Tour, and Wrigley Field.
Unfortunately for some retail investors, DKNG stock got tied into the SPAC-fueled mania of early 2021. DraftKings went public in April 2020 as part of a special purpose acquisition company (SPAC). However, as investors realized that sports betting would take time to develop, they took profits on the stock and that trend has continued into 2022. As of August 2022, the stock is down 28% for the year.
But the stock is up 48% in the month ending August 18 and that momentum is likely to continue in the busiest months of the sports betting calendar.
About DraftKings
DraftKings Inc operates as a digital sports entertainment and gaming company in the United States and internationally. It provides online sports betting and casino, daily fantasy sports, media, and other consumer products, as well as retails sportsbooks. The company also engages in the design and development of sports betting and casino gaming software for online and retail sportsbooks, and iGaming operators.
Read More - Current Price
- $40.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $51.00 (26.4% Upside)
#2 - Bally’s (NYSE:BALY)
Bally’s (NYSE:BALY) is best known for its portfolio of casino properties. There’s no question that the company is benefiting now that its properties are fully open for business. And that revenue is likely to continue growing after the company completes its $308 million acquisition of the Tropicana on the Las Vegas strip.
However, that doesn’t fully explain the 100%+ growth in revenue over the past 12 months. For that, investors would be wise to look at the company’s investment in the i-gaming/online sports betting sector. Plus, the company’s partnership with Sinclair Broadcast Group (NASDAQ:SBGI) which allow the company to put its brand on Sinclair’s regional sports networks. This is another way to seed its brand with minimal marketing spend. This will help give Bally’s an anchor in this space.
The company is profitable and is expected to show double-digit growth in both revenue and profits in the next five years.
About Bally's
Bally's Corporation operates as a casino-entertainment company. It owns and manages casinos across 10 states, a golf course in New York, a horse racetrack in Colorado, and has access to OSB licenses in 18 states. It also owns Bally's Interactive International, an online gaming operator; Bally Bet, a sports betting platform; and Bally Casino, an iCasino platform.
Read More - Current Price
- $17.78
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $17.14 (3.6% Downside)
#3 - Boyd Gaming (NYSE:BYD)
Boyd Gaming (NYSE:BYD) makes this list of sports betting stocks to consider due to its stake in FanDuel. FanDuel is one of the largest competitors for DraftKings. But the company also has a proprietary app, B Connected Sports, which launched in Nevada. This app allows users to bet on collegiate sports.
Unlike many other sports betting stocks, BYD stock held up well throughout the worst of the pandemic. It’s only been in the last few months that the stock has capitulated to market pressure. The stock is only supposed to post single-digit growth in revenue and earnings over the next several years. However with a price-to-earnings (P/E) ratio of 11x, the stock looks reasonably valued. Analysts give the stock a price target of $75.36 which is a 31% upside from its current level.
And the stock has over 70% institutional ownership which means it’s likely to be included in many of the most popular funds.
About Boyd Gaming
Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. The company operates through Las Vegas Locals, Downtown Las Vegas, Midwest & South, and Online segments.
Read More - Current Price
- $71.20
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $91.64 (28.7% Upside)
#4 - Penn Entertainment (NASDAQ:PENN)
When it comes to investing in the leading sports betting companies, Penn Enertainment (NASDAQ:PENN) has to be on the list. The company has a 36% stake in Barstool Sports. Whatever you may think of Barstool, the partnership gives Penn Entertainment (formerly Penn National Gaming) a national reach.
And in August, the company issued an SEC filing in which it expressed its intent to exercise its call rights and purchase the rest of the stake of Barstool. The total purchase price will come in at approximately $400 million. The company did not say whether the deal will be paid in cash. However, the company’s total liquidity at the end of June 2022 was $2.7 billion. The company expects the deal to close in February 2023
And this is in addition to the company’s own portfolio of casinos and interactive platforms which it operates in 19 states.
About PENN Entertainment
PENN Entertainment, Inc, together with its subsidiaries, provides integrated entertainment, sports content, and casino gaming experiences. The company operates through five segments: Northeast, South, West, Midwest, and Interactive. It operates online sports betting in various jurisdictions; and iCasino under Hollywood Casino, L'Auberge, ESPN BET, and theScore Bet Sportsbook and Casino brands.
Read More - Current Price
- $18.62
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $23.53 (26.4% Upside)
#5 - Gan Limited (NASDAQ:GAN)
An attractive way to invest in any sector is to invest in companies that build out the underlying technology. For example, investors looking for exposure to the electric vehicle sector could choose to invest in semiconductor companies that make the chips that will be essential to these vehicles.
And when it comes to sports betting, that means investing in companies that provide the software that mobile and online sports books require. If that interests you, one company to consider is Gan Limited (NASDAQ:GAN). The company offers GAN PAM (Player Account Management) which is a complete end-to-end business-to-business solution. This system includes patent protection something that is dear to every investor’s heart
The company posted strong revenue numbers in 2021 after getting hit with pandemic headwinds in 2020. Revenue growth is slowing in 2022, but the company is still expected to show double-digit growth in revenue and earnings over the next five years. That would make it more likely that the company would meet its forecast for profitability in 2024. In the meantime, analysts tracked by MarketBeat give the stock a 12-month price target of $9.17.
About GAN
GAN Limited operates as a business-to-business (B2B) supplier of enterprise software-as-a-service solutions to online casino gaming and sports betting applications in the United States, Europe, Latin America, and internationally. It operates through two segments: B2B and B2C. The company provides and licenses GameSTACK, an internet gaming platform that provides turnkey technology solution for regulated real-money internet gambling, online sports betting, and virtual simulated gaming.
Read More - Current Price
- $1.83
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - FuboTV (NYSE:FUBO)
The next stock on this list of sports betting stocks is FuboTV (NYSE:FUBO). I’ve described FUBO as a sum-of-its-parts stock. The company operates a streaming service that is a substitute for traditional cable. FuboTV is attempting to distinguish itself by a forward-facing focus on live sports.
However, the company also has plans to operate an interactive, integrated sports book. Recently the company announced that rather than going it alone, it’s seeking partnerships to bring its sports book to market. And it should be noted that the company already counts Comcast (NASDAQ:CMCSA), Walt Disney (NYSE:DIS) and ViacomCBS (NASDAQ:VIACA) as stakeholders.
On the positive side, revenue is growing and subscriber numbers remain solid. But the company is not expected to turn a profit for several years. Investors should also be aware that as of August 2022, short interest in FUBO stock is exceedingly high at around 29%. Nevertheless, analysts tracked by MarketBeat give FUBO stock a $8.46 price target which gives the stock a 74% upside from its August 18, 2022 price of $4.86.
About FuboTV
fuboTV Inc operates a live TV streaming platform for live sports, news, and entertainment content in the United States and internationally. The company's platform allows customers to access content through streaming devices, as well as on SmartTVs, mobile phones, tablets, and computers. fuboTV Inc was incorporated in 2009 and is headquartered in New York, New York.
- Current Price
- $1.39
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $2.88 (107.2% Upside)
#7 - HOFV (NASDAQ:HOFV)
If you’re an investor that’s comfortable with speculative investments, I’d invite you to take a close look at Hall of Fame Resort & Entertainment (NASDAQ:HOFV). I’ve described this stock as a picks-and-shovel play on the National Football League. I stand behind that. This is not a pure play on sports betting. The company has several potential sources of revenue.
However, as I wrote in March 2022, one of those sources is sports betting. The company has signed a 10-year agreement with Rush Street Interactive that will make the Hall of Fame Village a premier sports betting location. And the company is developing its own mobile sports betting app.
All of this, plus the company’s affiliation with e-Sports leagues positions the company for long-term growth in the sports betting space. Still, I’ll end this where I started. HOFV stock is not a pure-play sports betting stock, but if you believe in a sum-of-its-parts story, it could offer compelling growth.
About Hall of Fame Resort & Entertainment
Hall of Fame Resort & Entertainment Company, a resort and entertainment company, doing business as the Pro Football Hall of Fame. It owns the DoubleTree by Hilton located in downtown Canton, and the Hall of Fame Village, which is a multi-use sports, entertainment, and media destination. The company is headquartered in Canton, Ohio.
Read More - Current Price
- $1.12
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
I'll admit the sports betting sector is moving forward a bit slower than expected. Currently, there are no retail sportsbook in 11 out of the 15 most populous cities in the United States. Six states have legislation pending that would legalize sports betting (Ohio will start in 2023). But that still leaves 14 states where sports betting is illegal.
However, not now, doesn't mean not ever. It's still likely that more states will continue to legalize sports betting. And if California and Texas legalize sports betting it would be a major lift for an industry that is already growing. For example, in 2021, the American Gaming Association cites that Americans wagered nearly $57 billion.
Sports betting stocks fall under the category of risk on assets. And like any risk on asset, it's likely to take some time for this sector to reach its full potential. I believe that investors have to wonder if the stocks are trading at a fair value based on the states that are currently open for sports betting.
If so, then these stocks will likely to have proportionate upside as more states legalize sports betting.
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