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Sports Betting Market on the Cusp of a Boom: Stocks to Watch

Tirthankar Chakraborty

The U.S. sports betting market is set to boom in the near future, with industry heavyweights vying to make the most of it. Panelists at the NYC Sports Betting Investor Summit on Nov 4 said that the U.S. sports betting market will reach a worth of almost $7 billion to $8 billion over the next five years.

The industry is growing by leaps and bounds ever since the U.S. Supreme Court opened up the gigantic sports betting market, helping Americans place $150 billion in illegal wagers on sports every year. Sports gambling won’t be regulated by the Federal Government anymore, instead the individual states will take charge.

Last October, the state of New Jersey handled more than a quarter billion dollars in bets, showing a 41% increase from the previous month. But, that's just half of the $528 million Nevada handled. Legal sports gambling, in fact, state-by-state is growing by the day. Mississippi, Delaware, West Virginia, New Mexico, Pennsylvania and Rhode Island are also leading the way. Governor of Massachusetts Charlie Baker, in the meantime, presented a proposal to legalize gambling on professional sports online and even at casinos in Massachusetts.

Nonetheless, investment giant Morgan Stanley predicts that the U.S. market will be able to generate nearly 7 billion in revenues by 2025, significantly up from $833 million this year. By the way, executives from MGM Resorts, Hard Rock and Mohegan Sun have issued similar projections, with revenues expected to come in between $6 billion and $8 billion within the next five years. To top it, research firm Eilers & Krejcik Gaming, which tracks sports betting regulations, confirmed that their figures are close to what has been predicted by these various organizations.

What’s more, some companies are acquiring others to build high-profile partnership to make the most of the fast-growing industry. For instance, the National Basketball Association recently announced a partnership with authorized sports betting operator DraftKings.

Thus, from casinos to sports clubs to gambling app makers, all are looking to enter the sports betting market to rake in a lot of moolah. Let us, thus, take a look at stocks that can provide outsized returns as U.S. legalizes sports betting —

Scientific Games

Scientific Games Corporation SGMS develops technology-based products and services, and related content for the gaming, lottery, and digital gaming industries. Scientific Games is looking forward to enter sports betting by providing the required infrastructure.

The company has a Zacks Rank #2 (Buy). The company’s expected earnings growth rate for the current quarter is a superb 114.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boyd Gaming

Boyd Gaming Corporation BYD operates as a multi-jurisdictional gaming company. It operates through three segments: Las Vegas Locals, Downtown Las Vegas and Midwest & South. The company has been pursuing a number of acquisitions to make the most of the sports betting surge. Boyd partnered with MGM to share online and mobile gaming platforms.

Boyd Gaming, by the by, has managed some of the biggest sportsbooks in Sin City. It had opened two sportsbooks in its Mississippi venues and now plans to open four more at its venues in Iowa and Indiana. And now that sports betting are legal, Boyd is preparing to foray into other regional markets as well.

The company has a Zacks Rank #3 (Hold). The company’s expected earnings growth rate for the current quarter and year are a solid 40.6% and 29.3%, respectively.

MGM Resorts

MGM Resorts International MGM owns and operates integrated casino, hotel, and entertainment resorts in the United States and Macau. MGM generates nearly $4 billion in revenues from Las Vegas.

Now, the company is looking to build a sports betting empire, much bigger than its casino operations. And the timing can't be better. Needless to say, MGM will promote its sports betting app.

The company has a Zacks Rank #3. The company’s expected earnings growth rate for the current and next quarter are an encouraging 64.3% and 200%, respectively.

International Game Technology

International Game Technology plc IGT operates and provides technology products and services across lotteries, electronic gaming machines, sports betting, and interactive gaming markets.

IGT is a big firm with over 12,000 employees and manufactures more casino platforms than any other company. But, things started looking up for International Game Technology after it started branching out into sports betting. IGT has already handled $12 billion in sports betting, which makes it a safe bet for investors.

The company has a Zacks Rank #3. The company’s expected earnings growth rate for the current quarter and year are a promising 12.9% and 35.7%, respectively.

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International Game Technology (IGT) : Free Stock Analysis Report
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