In the past three weeks, shareholders of Caesars Entertainment Inc., DraftKings Inc., and Penn National Gaming Inc. have seen an increase of close to 20% in their portfolios following analysts’ prediction of a triple increase in bets for professional and college football sports betting. (Finance Yahoo, 2021).
The prediction also foresees Americans betting a little more than $20 billion this season alone. This comes on the heels of reports that six more states have recorded a huge influx of new customers on betting websites, pulling close to $1.5 billion as total revenue from both brick and mortar casinos as well as online sportsbooks. This brings the total number of states with an active betting audience to 26, as stated by PlayUSA, a top gambling analyst firm. (SBC Americas, 2021).
In a recent game, Thursday’s night special NFL game between Dallas Cowboys and Tampa Bay Buccaneers, DraftKings Inc. distributed $50 million in winning bets to customers. Total bets gotten alone in that game were 1.5 million.
A comment made by the U.S lead of top betting bookmaker, 888 Holdings Plc, Yani Sherman, stated that a huge gambling market growth was expected.
“It’s very seldom to see the market segment grow in front of you so quickly, there’s no way around it. The U.S. represents the biggest regulated online gaming opportunity in recent history.”
And that’s not all, with the opening of more USA online casinos, analysts at Cathie Wood’s ARK Investment Management LLC estimate current projections of $180 billion as total wagers for bets by the year 2025. (Bloomberg, 2021).
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Analysts Estimate Revenue May Be Inadequate for Stakeholders
Despite the positive projections from analysts at Wall Street, they also fear that investors may not be their dues worth, well not immediately. Revenue generated from sports betting may not be enough to serve as profits to budding investors and shareholders.
Revenue generation for sportsbooks is straightforward. Balancing both sides’ odd probability for a game is expected to increase funds, even though the outcome of a game cannot be controlled, which can increase bets coming from both ends of betting enthusiasts for a game. Sportsbooks get commissions if different sides bet as high as possible.
This may not be enough to pay investors, who expect good returns. A winning reason may be attributed to rising costs for ads and promos to entice new customers. With the rise of so many competitors, bookmakers try to outdo each other in creating sizzling market campaigns, and reward programs for new customers. This can be seen with the recent turnaround of the NFL, on their stance against sports gambling. As they now accept ads from sports betting platforms to be displayed during matches. A feat that ends a decade-long stance on gambling by the NFL.
Analysts are however hoping that the situation may become favorable as time goes on, and shareholders begin reaping fruits from 2024.
What This Means For The US Gambling Industry
The investors are, however, not sleeping on the projections to come through, as it is evident getting good returns on investments is a primary goal. This is seen with partnerships going on between bookmakers to find a profitable outcome.
These supposed partnerships are coming to fruition with the recent situation of mergers in the past two months between bookmakers in the industry. The recent acquisition of Score Media & Gaming Inc. by Penn National and Golden Nugget Online Gaming Inc. by DraftKings only indicates that this may be the beginning of more takeovers, and billions of dollars being moved in the industry. (CNBC, 2021).
A top analyst at ARK Investment Management, Nicholas Grous had this to say:
“At the end of the day, you’ll have three to four very strong brands in the U.S. where the rest of the players either are fighting for scraps or get consolidated into larger companies.”
Even with the current mergers and takeovers, Wall Street still believes it is not enough to speed up the gains process. A total of 13% is expected as shares increase over the next year for DraftKings, according to an analysis done by Bloomberg.
Of course, there is also growing interested in casino gaming to with more and more US states legalizing online casinos with an assortment of games like blackjack, craps online, online roulette, and video poker – make sure you check out our strategy guides on these to make sure you get the edge.
- CNBC, 2021
- Bloomberg, 2021
- SBC Americas, 2021