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Sports betting in focus ahead of NFL season

As the NFL season prepares for kickoff, Yahoo Finance's Josh Schafer discusses the outlook for sportsbook revenues, sports betting legalization, and the Super Bowl odds placed on some top teams.

Video Transcript

AKIKO FUJITA: Well, it is that time of the year again. The 2022 NFL season kicking off today with the Buffalo Bills facing the reigning Super Bowl champs, the LA Rams. This marks the start of a busy season for sports betting. As always, we've got Josh Schafer on the case here. What are we looking at?

JOSH SCHAFER: Akiko, I won't touch on the Rams not being favored at all.

AKIKO FUJITA: We'll talk about it later. We'll talk about that later.

JOSH SCHAFER: We'll get there in a second. Let's hit on what this kind of means for the market and what it means for some of these sports books when we talk about them as publicly traded stocks, right? And I think Amy Howell probably put this best to us about a month ago. This is the number one acquisition moment for these sports books. It is a huge time of year. Research from Macquarie pointed to the fact that there's a billion dollars bet per week during the NFL season.

About 35% of the total revenue from sports books for the entire year comes in the fourth quarter because of NFL season. So this is really kind of the moment. And you can see the map right there. And that's going to be one of the bigger stories this year, is there aren't that many new legal states from the end of last season.

Right now, Kansas just opened up, kind of a smaller state. Will be a little bit of a battleground to see who wins out there. But legalization isn't the biggest story really headed into the year this year. It's going to be who can keep market share. We know FanDuel is kind of ruling the space right now at about 50% market share in states that they operate in.

And they're also reading one of the other charges that we've talked a lot about when we talk about content, right? That's going to be a huge thing to watch this year, FanDuel's 24/7 Sports Network. Does that drive more bettors to FanDuel's platform? What do they attribute there, I think is going to be interesting.

Penn Entertainment another name in the space, completing their purchase of Barstool at some point during the NFL season. Is Barstool Sports going to be a driver for Penn Entertainment for more space? It'll be interesting to see how those things play out.

And a final thing that is going to be huge to watch is the marketing spend in those promotions. We love talking about the promotions. Some people in the studio, I think, even like playing some of those promotions, and that's why we like talking about them, right? But what does that mean for the companies as far as spending goes and how they're able to acquire customers? Because we know Caesars recently said that they cut back $250 million in marketing spend last quarter.

There's a big cutback. Jason Robbins said that they've cut back in New York because the tax rate is too high. They're taxed at 51% in New York. So there's significant cut back there in the marketing spend. Can they continue to acquire customers while cutting back the marketing spend, is what the Street analysts that I've spoken to are really watching.

AKIKO FUJITA: Yeah, the content side is going to be so fascinating to watch because you're really curious about where viewers are now going to go now that there's other alternatives, right? We haven't even talked about Amazon, but we'll save that for next week. OK, let's talk about the favorites. Five months to go until the Super Bowl. Never too early. Why not the LA Rams?

JOSH SCHAFER: Well, people aren't putting a lot of money on them yet. So the top five on DraftKings right now-- we have DraftKings pulled up-- were the Buffalo Bills. That's-- you can see 26% of the handle. I mean, it's in New York, too, so it's a little bit biased probably, right?

AKIKO FUJITA: Yeah, just want to put that out there.

JOSH SCHAFER: But 26% of the handles on the Bills. And I saw that also from Caesars as well. There's a lot of betting going on, on the Bills. And then you see the 49ers, the Chargers.

AKIKO FUJITA: The Chargers. Out of both LA teams, the Chargers.

JOSH SCHAFER: It's because they're plus 1,400, though, too. Your Rams won't get a lot of action to start the year because their odds are probably closer to the Bills, right? At 550, you won't make as much money.

AKIKO FUJITA: True.

JOSH SCHAFER: You can throw 10 bucks on Joe Burrow right now in the Bengals and make 230.

AKIKO FUJITA: Yeah.

JOSH SCHAFER: I like the Bills personally. If I had to pick from that group we were looking at--

AKIKO FUJITA: I'm with you.

JOSH SCHAFER: --maybe league-wide, I think the Bills have a very good chance of finally breaking through this year.

AKIKO FUJITA: Yeah, I'm with you. If we had to pick from those teams, the Bills, but I'll be rooting for the Rams tonight.

JOSH SCHAFER: Do you think they can repeat, though, for the whole year?

AKIKO FUJITA: I don't like to make predictions. I'm going to jinx it. Right?

JOSH SCHAFER: I feel like you probably picked the Rams on the preseason show last year then before the Super Bowl?

AKIKO FUJITA: I did not. I did not.

JOSH SCHAFER: Well, we're going to have to roll the tape on that.

AKIKO FUJITA: I did pick them for the Super Bowl, and they won, so maybe the jinx thing doesn't work. But we'll all be watching tonight. Josh staying on top of the beat for us. Thanks so much for that.