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  • Thematic Investing

    Place Your Bets: Sports Wagering Exits the Shadows

    Nicolas Fonseca, CFA, ETF Product Analyst
    February 05, 2020

    Super Bowl LIV was this past Sunday, and with it, sports betting had a winning day. The American Gaming Association estimated that $6.8 billion in bets were made on the game, between the Kansas City Chiefs and San Francisco 49ers.1 Sports betting has skyrocketed since May 14, 2018, when the U.S. government repealed the ban on sports gambling.

    A Market with Great Expectations

    The gambling market is huge, with up to $150 billion wagered illegally on sports every year in the U.S.According to Morgan Stanley analyst Thomas Allen, sports betting represents the biggest growth opportunity for the U.S. gambling industry in the coming years. He estimates that sports betting revenue will reach $7 billion by 2025, up from less than $1 billion in 2019. The total size of the sports betting market is estimated at $15 billion,3 assuming broad legalization occurs at the state level. So far, 20 states allow some form of sports betting with many more working on bills.

    Drawing the Betting Lines: States that Have Allowed Legal Sports Wagering

    Drawing the Betting Lines: States that Have Allowed Legal Sports Wagering

    Source: Morgan Stanley, The Action Network

    From Backroom Bookies to Digital

    Currently, the industry is focused on mobile platforms, as many bettors seem to prefer to wage on their smart device rather than in person. A number of gambling companies have made the move to New Jersey because of the state’s law allowing online gambling. Last year alone, $4.5 billion was wagered in sports betting in NJ, generating $300 million in revenues.4

    Betting on Gaming

    Just last week, Penn National Gaming agreed to buy a 36% stake in Barstool Sports for $136 million. Penn National will provide the infrastructure, and Barstool will bring its 66 million unique monthly visitors, with the vast majority ages 18-34. With the deal, Penn National will rebrand its retail approach as the “Barstool Sportsbook” with the idea of opening 20 retail locations by the end of 2020.5

    Between the legalization of sports betting and improving technology, sports wagering is becoming more easily accessible to more bettors. We believe this will help drive growth in the U.S. gaming industry and create interesting investment opportunities.


    1Source: American Gaming Association, “A Record 26 Million Americans Will Wager on Super Bowl LIV.”

    2Source: American Gaming Association, “97% of Expected $10 Billion Wagered on March Madness to be bet Illegally.”

    3Source: Barron’s, “Sports Gambling Will Be a Huge Opportunity. Bet on These Stocks.”

    4Source: Action Network, “New Jersey 2019 Sports Betting Handle, Revenue, Taxes & More.”

    5Source: Legal Sports Report, “Where The First Barstool Sportsbook In The United States Will Be Located.”

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  • Authored by

    Nicolas Fonseca, CFA
    ETF Product Analyst