The Sports betting industry is among the fastest-growing sectors globally. The growth is largely fueled by brick and mortar betting shops’ closure due to the Covid19 pandemic. Most land-based gaming companies are now exploring the online sports betting industry more than ever before.
The advancement of sports betting technologies is also a major contributor to fast growth. Innovations such as in-play betting are revolutionizing how gamblers interact with the game.
The global proliferation of smartphones, especially in emerging markets, has also pushed the growth to new heights. According to Technavio, the global sports betting market is expected to grow by $134.06 billion by 2024.
The US sports betting industry is still in its nascent stages, given that most states have just legalized it. However, the stock market has already taken the positive industry developments on high gear. US sports betting stocks have been rallying since 2019 and are expected to maintain steady growth for the next five years.
Consider the stocks below for both medium-term and long-term investment if you want to invest in this industry.
DraftKings Inc (NASDAQ: DKNG)
This growth stock is among the most promising sport betting stocks in the industry in 2021. It’s a strong growth stock given its rapid expansion to new markets and introduction of innovative products.
DraftKings Sportsbook is available in over ten states, including Indiana, Pennsylvania, West Virginia, New Hampshire, New York, Iowa, and Mississippi. Its revenues have maintained steady growth since 2019.
The company reported a 25% to 30% annual revenue growth in 2020 and expects to hit a 45% year-over-year growth in 2021. Strong revenue growth is expected as the US warms up to sports betting legalization and as the company continues to venture into new markets.
Analysts at Goldman Sachs rate DKNG as a strong buy, given its leading position in most markets. The company is also well-positioned to participate in the economics of a single operator.
Moreover, its top-quality partnerships are expected to keep pushing it to new heights. Such partnerships include the deal with NFL Canada. DraftKings has also recently secured a partnership with UFC as its “Official Sportsbook and Daily Fantasy Partner”.
DKNG stock has been on the losing side for some months, but this shouldn’t discourage medium-term and long-term investors from buying. It has also shown significant volatility and may therefore be a good bet for day trading.
Penn National Gaming, Inc. (NASDAQ: PENN)
With a presence in about 19 US states, PENN is among the fastest-growing sports betting companies across the globe.
The company is new to online sports betting, having entered the market in early 2020. PENN partnership with Barstool Sports in Pennsylvania is among the growth propellers for 2021. The partnership will see Barstool Sports promote the company’s sports betting tools, among other products.
The latest data shows that PENN stock price has gained nearly 750% in the past year. Its share price continues to rise steadily following its addition to the S&P 500.
The meteoric rise is attributed to the legalization of sports betting in most US states which made the US one of the fastest-growing sports betting markets. Analysts predict that over $20 billion has been wagered through US Sportsbooks since 2018, with most of the bets being placed through the top ten best betting sites in the USA. Momentary dips are expected due to the uncertainty around New York’s gaming bill, but this shouldn’t be a concern.
PENN seems well-positioned to take a market lead in sports betting given its innovative history. This growth stock is hailed by experts as a good buy for medium-term investment. It’s also highly volatile and therefore a good bet for stock CFDs traders.
GAN Limited (NASDAQ: GAN)
This company provides gaming software to online casino and online sports betting companies in the US, Italy, the UK, and the Channel Islands.
GAN is a growth stock worth watching in the sportsbook arena. This company offers a myriad of gambling products, including Play for Fun Simulated Gaming and iCasino. However, sports betting products such as GameSTACK remain to be its cash cow in 2021.
GAN is currently trading at the bottom of its 52 weeks low. The plummet is associated with a drop in revenues primarily driven by the end of the partnership with WinStar World Casino. However, it is projected to gain steadily in the coming months as its innovative sports betting products continue to gain traction.
Its revenues are projected to rise from $35.16 million in the last quarter of 2020 to $101.65 million in the last quarter of 2021. GAN has maintained a steady revenue growth, rising from $9.62 million in the last quarter of 2016.
According to the Investment Management Firm, Symmetry Invest, GAN fundamentals are strong. This means that it’s a good buy for medium-term and long-term investment. It appears in 7 hedge fund portfolios, but it’s not in Symmetry Invest’s top ten stocks among hedge funds.
GAN remains highly volatile and therefore not fit for short-term investment. However, it remains a top pick for CFDs traders due to the high volatility.
Churchill Downs Incorporated (NASDAQ: CHDN)
With a market cap of $8.76 billion, Churchill Downs Incorporated is among the world’s biggest sports betting companies. This stock appears in the portfolio of 25 hedge funds tracked by Insider Monkey.
CHDN has gained over 200 percent since the start of the Covid19 pandemic in early 2020, easily outperforming the S&P 500. Analysts estimate that the boost is a result of the federal stimulus package. Even so, the future remains bright as the US continues to embrace sports betting.
As mentioned earlier, the legalization of sports betting in most US states is among the major drivers of growth in the sports betting industry. Churchill Downs is already a big brand name in most countries and among the fastest-growing sportsbooks in the US.
This stock has been a consistent dividend payer since 1963. It’s, therefore, a good bet for value investors interested in long-term growth and consistent cash flow.
CHDN stock remains highly volatile, trading between the $85 and $218 range in the last 52 weeks. This level of volatility makes it a good bet for day traders but not short-term investors.
Takeaway
The global sports betting industry is bound for explosive growth both in the short and long term. Brick and mortar gambling companies are already exploring this industry en masse as land-based gambling shops continue to suffer due to the Covid19 pandemic.
The US market is now open for sports betting as most states continue to legalize it. Most sport betting stocks are already rallying, with analysts ranking them for medium-term and long-term investment.
Moreover, the industry, in general, remains highly volatile. This means that the best sports betting stocks may also be a good bet for day trading.
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