Gambling has a long and storied history that stretches back almost as far as our knowledge of the past. Today, there are more ways than ever to place a wager, and the advent of the Internet has created even more avenues for people to bet against the house or each other. Sports betting is at the forefront of the gaming sectors currently experiencing the biggest booms in popularity.

Not only has wagering on sports games because a popular activity in many nations worldwide, but many companies have also sprung into existence looking to capitalize on this trend. This industry expansion has led to the proliferation of many new gambling stocks as these businesses go public and seek to attract investors. What do you need to know about sports betting in the digital age, and should you consider investing in these businesses?

The Basics of Today’s Sports Wagering

There aren’t many differences between what you can experience online versus the experience you’d have visiting a legal sportsbook. The types of bets are the same; for example — players can make money line wagers, take over/under bets, bet the point spread, and more. The platform automatically pays out the player should they make a winning wager. However, a key difference is the opportunity to offer unique “proposition” style bets with short wagering windows — an exciting way to create opportunities for fun while also bringing in additional revenue beyond pre-game betting.

Sports betting is just one aspect of the digital gaming and entertainment industry. Like real-life casinos, some locales also allow web users to access online “table games” such as blackjack, slot machines, and even poker such as Texas hold’em. Increasingly, some companies have chosen to consolidate all these services under one roof. Others continue to focus strictly on sports betting primarily.

Why Are Online Betting Businesses Interesting Investment Opportunities?

Online gambling businesses show strong year-over-year growth in regulated markets. By expanding beyond the requirement for bettors to visit a physical location to place a bet, the potential to grow user bases on a massive scale is clear. The creation of unique, new wagering products also positions many of these businesses favorably in terms of the value proposition they provide.

Red Rock Resort sportsbook director Chuck Esposito said on the surge in betting.

“Overall, I think the general acceptance of sports wagering is a big part of it,” he said. “The increased volume on both in-play (betting) and props; the continued growth of mobile; the restrictions on masks lifted; the 100 percent occupancy compared to 50 percent last year; and the willingness industry-wide to take higher limits.”

The trend in many locales is towards additional regulation and legalization of activities, including online sports betting, rather than instituting other restrictions. This potential for future growth and reaching currently untapped markets mean that already-hot gaming stocks could explode in the future. However, regulatory approval is not sure, and in some states in the US, sports betting seemed to have a legal future only for legislators or the courts to reverse course at the last minute.

Considering the Future

Sports betting businesses represent an exciting opportunity with a rapidly expanding market value and a seemingly voracious appetite for wagering services in many markets. When carefully chosen and managed, investments in these businesses could lead to short or even perhaps appreciable long-term gains. However, the uncertain regulatory environment, especially the patchwork legislation in the United States, should factor into your risk calculations. Consider exploring the different gaming businesses available and tailor your investments to your preferred profile.

News – New York Sports Betting sets record for mobile sports betting, generating $1.6 billion in handles.

iBET ETF Insights: This is more than double what Arizona did for its first month launch at $777 million. This makes NY the largest mobile sports betting state. Only California which is not legalized at this point can unseat NY.

Stocks Impacted:
Caesars (CZR) – Led the state with over 600 Million in handles in its first month
Fan Duel (FLTR) – Did over 500 million in handles in NY in its first month

Upcoming Earnings to Watch this week:
MGM, Kambi, Evolution, Kindred

3 Stocks to Watch

DraftKings (NASDAQ: DKNG)

DraftKings went public in April of 2020 through a special-purpose acquisition company (SPAC).

DraftKings (DKNG) soaked up the spotlight in 2021. A couple of major events:

• (March 4) DraftKings became the official sportsbook and daily fantasy partner of the UFC in the United States and Canada.

• (April 15) The NFL announced that DraftKings would become an official sports betting partner. This included an extension of DraftKings as the NFL’s exclusive official daily fantasy partner.

• (November 4) The NBA expanded its relationship with DraftKings and made the company a co-official sports betting partner of the league. This included daily fantasy sports, iGaming, sports betting, and a slew of other opportunities.
DraftKings forecast a 2021 fiscal revenue between $1.24-$1.28 billion. They also estimate a nearly 50% increase in revenue for the fiscal year 2022.

iBET ETF Insights: DraftKings did nearly 400 million in handles in New York in the first month of operations. DKNG currently sits near a 52-week low and Morgan Stanley recently upgraded the stock.

Game Account Network (NASDAQ: GAN)

Gan is a Software-as-a-Service (SaaS) provider that builds solutions for sports betting and online gaming clients. They are well recognized for their award-winning platform GameSTACK. GameSTACK provides solutions in the realm of account management, payment, and analytics.

Following a sub-par earnings report for Q3 of the 2021 fiscal year, CEO Dermot Smurfit stated “Our third-quarter financial results were in line with our expectations as our business to business segment revenues rose 5% compared to the prior quarter, while our business to consumer revenues experienced seasonality following a record second quarter.”

iBET ETF Insights: In early 2022, GAN is sitting close to its 52-week low. That said, the sports betting and online gaming industries continue to expand as our thirst for digital experience and speculation grows. GAN is in an attractive position as a SaaS provider in this space.

Penn National Gaming Inc. (NASDAQ: PENN)

Penn National Gaming is a more traditional gaming company, with brick-and-mortar locations in nearly half of all US states. They offer table traditional gambling options, as well as live sports betting and racing. Penn’s most significant move in the emerging online sports betting world was its acquisition of a 36% stake in the infamous Barstool Sports company in early 2020. Since then, Barstool has gone live with its Sportsbook app in several states.

In August of 2021, Penn also acquired Score Media and Gaming for $2 billion. Score Media and Gaming has a strong presence in the Canadian mobile sports betting market. With the reach of these acquisitions and a proven focus on the digital sports betting industry, Penn is an attractive long-term play.

iBET ETF Insights: PENN is currently trading near its 52-week low, similar to DKNG, GAN, and the rest of the sector.

News – New York Sports Betting has generated $1.2 billion in handles and $91.4 million in revenue in just 16 days.

iBET ETF Insights: Industry insiders believe NY will set a new record for the largest amount of sports wagering in the first two months of business. It will be a couple of weeks before New York reports its handles for January and February, but insiders believe it will surpass the current record of $777 million held by Arizona.

News – The Louisiana control board has opened up online sports betting as of 1/28/2022.

iBET ETF Insights: Key timing with the NFL Championship Games played last weekend and the Super Bowl in Two Weeks. The operators going live with the launch were DraftKings, FanDuel, Ceasars, BetMGM, BetRivers, and Barstool Sportsbook.

News – Paysafe (PSFE) Enters New York Sports-Betting market – Paysafe is an online payment solution that makes online purchases secure. Instead of using your debit/credit card, they provide a Paysafecard that is prepaid online and does not have any personal or financial details linked to it.

iBET ETF Insights: Paysafe has already gone live in other states such as Arizona, Louisiana, Michigan, and more. In total Paysafe is in 18 states plus Washington DC.

News – Morgan Stanley upgrades DraftKings stock – Last Wednesday Morgan Stanley upgraded DraftKings stock rating and stated that after its earlier stock decline, timing is good for long-term investment in what is a potential $21 Billion dollar market.

iBET ETF Insights: The upgrade by Morgan Stanley follows the first official numbers released Friday by the New York State Gaming Commission for the new online market. New York Sports Betting has generated $1.2 billion in handles and $91.4 million in revenue in just 16 days. Morgan Stanley predicts that legal US sports betting and iGaming will increase to $20.6 billion in 2025, from less than $1.5 billion in 2019.

News
New Jersey gives tax break for Sportsbooks Governor Phil Murphy signed a bill giving their sports lounges a tax break on credits (free play) that are used to entice gamblers into playing. The new law applies to brick-and-mortar locations, and it allows online operators linked to racetracks to get the same relief.

iBET ETF Insights: This new law should help the racetracks and casinos diminish the past 2 years of losses due to the pandemic, when 92% of sports betting took place online.

Online gambling has quickly become one of the most popular markets in the world. The industry is seeing an increase in volume flowing through it with each passing quarter and 2022 will be no different. According to Grand View Research, the online gambling market is expected to reach $127.3 billion by 2027. More than $500 million was spent betting on Super Bowl LV.

The industry can be split into two distinct categories – casino betting and sports betting. The modernization of technology has revolutionized the way the industry generates revenue, moving from land-based casinos to online and mobile experiences. It’s an undeniable shift in consumer behavior that has only been accelerated by the global pandemic and growing digital landscape.

2022 offers exciting growth potential for the stocks in this industry. Here’s why we should be looking at the digital transformation as an opportunity rather than a setback.

Sports Betting Is Here To Stay And 80% Takes Place Online

Sports are a universal way for us to connect and involve ourselves in a community. The desire to speculate on and potentially profit from our passions is growing. Millennial behavior has shown their appetite shifting away from traditional gambling, and into sports betting.

It’s already a huge market, and it’s only getting bigger. About $160 billion worth of bets are made on sports each year, with online bookmakers taking almost 80% of that figure. Once a largely niche activity, the digitization of betting has driven the market forward to huge growth. The ongoing legalization of sports betting across states in the US has allowed for this exponential growth.

Grand View Research estimates a compound annual growth rate (CAGR) of 10.1% from now to 2028 in the global sports betting market. We may not be able to pack Vegas casinos full of gamblers amidst the Omicron breakout, but we can be confident that sports enthusiasts are placing their bets on sites like DraftKings and Barstool Sports.

Casino Stocks Are Quickly Adapting

Casino stocks are rapidly expanding their online gambling offerings. Other companies tangential to the industry are doing the same to capitalize on growing demand.

These companies recognize that the online and mobile market participants crave a dynamic gambling environment. iGaming companies are introducing new and engaging games to appeal to younger generations. Penn National (PENN- NDAQ), offers a mobile application with slots and table games. BetMGM (MGM – NYSE) – offers the same, with additional games that further socialize the gambling process.

DraftKings (DKNG – NDAQ) is stirring up the competition by offering traditional table games like poker, blackjack, and baccarat on DraftKings Casino. They see the lucrative opportunity of online gambling outside of just sports.

According to Mordor Intelligence, the online gambling market is expected to register a CAGR of 11.49% during the forecast period, 2021-2026.

COVID-19 has caused turbulence for the lives of many. Our growing digital addictions have a number of downsides too. However, these two factors have positioned and allowed the gambling industry to expand online in an expedited manner. Companies in the industry and their stock prices will likely reflect that growth in the years to come.

As of 1/25/2022, the top 10 holdings of the fund are, FLTR LN, LVS, MGM, PENN, EVO-SS, SGMS, KAMBI-SS, CZR, 9672-JP, TAH-AU. They can be viewed here iBET Sports Betting & Gaming ETF (IBET) – Inherent Wealth Fund

References:

https://www.grandviewresearch.com/industry-analysis/sports-betting-market-report

https://www.investors.com/news/draftkings-stock-leads-gambling-transformation-new-casino-stocks-next-generation-take-over/

https://www.mordorintelligence.com/industry-reports/online-gambling-market

https://www.grandviewresearch.com/industry-analysis/online-gambling-market

The New York Gaming Commission announced on Thursday 01/06/2022 that legalized online sports betting is coming to New York. New York became the 18th state to legalize online sports betting, making it available to its 20 million-plus residents. On Saturday 01/09/2022 at 9 am ET, four books launched their services in New York.

Online sportsbooks in New York were long overdue. The state is home to some of the nation’s biggest sports fans and most successful teams. Given the state’s already liberal framework for gambling, it’s no surprise that a legal online sports betting market has finally come to New York.

Industry insiders believe NY will set a new record for the largest amount of sports wagering in the first two months of business. It will be several weeks before New York reports its handles for January and February, but insiders believe it will surpass the current record of $777 million held by Arizona.

Let’s dive into the four books that New York Residents will be able to bet with.

1. DraftKings Sports Book NY (DKNG – NDAQ)
DraftKings is one of the top online sports betting sites in the world. The company is a leading fantasy sports site that has been in business for nearly a decade. It’s no surprise that DraftKings is the first sportsbook to launch in New York as they have long been planning for this day.

The sports betting and fantasy giant was quick to jump on the sports betting train after the repeal of PASPA in 2018. They’ll likely be one of the frontrunners in the New York scene, making quick partnerships with local casinos.

2. FanDuel Sports Book NY (FLTR – LSE)
FanDuel is another popular fantasy sports site that has invested heavily in sports betting. They were ranked the number one overall fantasy sports site in 2018. After the PASPA repeal, FanDuel wasted little time in announcing their partnership with MGM Resorts in New Jersey. They also have a lucrative NBA deal.

“I suspect that New York will surpass all states in their debuts,” Andrew Sneyd, FanDuel’s senior vice president of brand marketing, told CBS MoneyWatch. “It’ll be a very successful first couple of months for New York.”

FanDuel is a betting powerhouse that is owned by Flutter.

3. BetRivers NY (RSI – NYSE) 
BetRivers is a smaller betting company that was launched over a decade ago and has been widely successful in the online poker market. BetRivers currently operates in a handful of sportsbooks around the United States.

As of now, BetRivers is one of the smaller betting companies in the New York sports betting market. However, that may change quickly. The company is one of the top online poker sites in the United States and could easily become a top sports betting site as well.

4. Caesars Sports Book NY (CZR – NDAQ)
Caesars Entertainment is one of the largest casino chains in the world. They operate in a variety of different markets but are most well-known for their Las Vegas casinos. Caesars is one of the most popular online poker sites in the country as well.

They are a natural fit for sports betting and are expected to have a large presence in the New York online sports betting market. After their acquisition of William Hill, the sky is the limit for this gambling giant. These are just the first four books to be authorized – many more are on the horizon.

New Jersey Could be Impacted Negatively

New Jersey a top sports betting market may be impacted negatively. Through November, New Jersey’s nine casinos and three horse tracks have taken nearly $10 billion in wagers. Experts have estimated as much as 25% to 30% of sports bets in New Jersey are placed by New York residents.

Most New Yorkers will probably stay home now and place bets, Daniel Wallach a sports wagering lawyer in New York said, meaning that New Jersey’s sports handle could fall as much as 20%. “It’s not a stretch for a state like California to eventually become legalized and pull down $30 billion in andles every year,” said Wallach, who also teaches sports wagering law at the University of New Hampshire.

Online sports betting in New York has been a long time coming. Fans are excited to speculate on their favorite sports, and the state is looking forward to all the added tax revenue. It’s a win-win! Plus, the legalization is coming just in time for the NFL post-season run including the Super Bowl.