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The sports betting and iGaming sector has seen intense selling pressure amid the general risk-off trading in the market with investors turning away from high-growth story stocks toward value names. The share price drops have run counter to some of the positive developments on the regulatory landscape with sports betting and volume numbers.
The blazing-hot New York sports betting market has generated $1.2B in handle and $91.4M in revenue for the first 16 days of action in the state. The sportsbooks leaders in the state so far are Caesars Sportsbook (NASDAQ:CZR) with 41.5% of handle and 45.7% of revenue, FanDuel (OTCPK:PDYPY) with 30.6% of handle and 26.4% of revenue, DraftKings (NASDAQ:DKNG) with 22.6% of handle and 23.8% of revenue, BetMGM (NYSE:MGM) with 3.5% of handle and 2.8% of revenue and BetRivers (NYSE:RSI) with 1.9% of handle and 1.3% of revenue.
PointsBet (OTCQX:PBTHF) launched in New York on January 24, while Bally (NYSE:BALY) Bet, Resorts World Bet and WynnBet (NASDAQ:WYNN) are still waiting for their official launches.
Elsewhere in sports betting, seven platforms went live in Louisiana last week and the regulatory process in Ohio is moving along. Meanwhile, the sports betting volume numbers continue to dazzle in Arizona and Michigan with hold rates for operators higher than some analysts anticipated. Things are not so positive in Florida where an effort to get an online sports betting initiative on the ballot for the November election failed. Also last week, Penn National Gaming (NASDAQ:PENN) raised some eyes by saying that it is ready to launch its mobile sports betting offering in Ontario when the province officially opens the market for sports betting and online gaming on April 4.
An investor day event by Genius Sports (NYSE:GENI) highlighted the upside potential for data providers and tech partners in the sports betting and iGaming industries.
On Wall Street the most notable action last week was an upgrade from Morgan Stanley on DraftKings (DKNG) to Overweight with the stock more than 70% off its 52-week high. Analyst Thomas Allen - "While we and the market have been focused on near- to medium-term profit concerns, we believe at the current price, one should not ignore that DKNG is a leading market share player in what will be a very large profitable market. At $19, the stock is trading at 9x our 2025e EBITDA; using 15x to comp to other High Growth Internet stocks and reflect what we think will still be a double-digit EBITDA grower post-2025, we get to $31, implying ~60% upside."
YTD share price returns of some stocks that touch the sports betting/iGaming spectrum: PlayAGS (NYSE:AGS) +12.4%, Kindred Group (OTC:KNDGF) +7.1%, Wynn Resorts (WYNN) -1.1%, Gambling.com Group (NASDAQ:GAMB) -3.7%, Inspired Entertainment (NASDAQ:INSE) -4.6%, Bally's (BALY) -5.4%, Flutter Entertainment (OTCPK:PDYPY) -6.9%, MGM Resorts (MGM) -7.24, Everi Holdings (NYSE:EVRI) -8.5%, International Game Technology (NYSE:IGT) -9.3%, Entain Plc (OTCPK:GMVHF) -9.9%, Boyd Gaming (NYSE:BYD) -10.2%, Penn National Gaming (PENN) -14.8%, Evolution Gaming (OTCPK:EVVTY) -16.1%, Churchill Downs (NASDAQ:CHDN) -16.3%, Scientific Games (NASDAQ:SGMS) -18.0%, 888 Holdings (OTCPK:EIHDF) -19.2%, Playtech (OTC:PYTCF) -20.8%, Caesars Entertainment (CZR) -21.9%, Genius Sports Limited (GENI) -22.6%, Esports Entertainment Group (NASDAQ:GMBL) -22.8%, DraftKings (DKNG) -24.9%, Golden Nugget Online Gaming (NASDAQ:GNOG) -25.1%, PointsBet Holdings (OTCQX:PBTHF) -26.8%, Sportradar Group (NASDAQ:SRAD) -28.1%, GAN Limited (NASDAQ:GAN) -28.8%, fuboTV (NYSE:FUBO) -36.6%, Rush Street Interactive (RSI) -46.3%, Esports Technologies (NASDAQ:EBET) -50.1%.
Are there some value plays following the selloff in the sector? Boyd Gaming (BYD), Bally's (BALY) and Penn National Gaming (PENN) trade with forward price-to-earnings ratios below 20X, while the Seeking Alpha Quant Rating on International Game Technology (IGT) and Inspired Entertainment (INSE) are flashing Strong Buy. Add your own best bet in the sector to the comment stream.