NFL football proves another jolt to sports betting sector

Sep. 19, 2022 1:13 PM ETDraftKings Inc. (DKNG)MGM, PENN, CZR, GMVHF, PDYPYBy: Clark Schultz, SA News Editor6 Comments

Green grass with dollar bills. Gambling thoughts.

Oundum

Sports betting app downloads surged again during the second weekend of the NFL season and with college football into its fourth week.

Bank of America reported that through the first two weekends of September, iOS app downloads reached ~950K to represent +77% year-over-year growth assuming an equal weighting throughout the month. Analyst Shaun Kelley noted that the implied 77% Y/Y growth is slightly ahead of the +68% Y/Y growth YTD. DraftKings (NASDAQ:DKNG) is noted to have taken the iOS share lead at ~45% thus far in September, which BofA attributes to an app update heading into the NFL season.

DraftKings (DKNG) ranked 5th in downloads across the broad iOS sports app category, while FanDuel (OTCPK:PDYPY) was 7th and BetMGM (MGM) (OTCPK:GMVHF) was 19th. Barstool (PENN) and Caesars Sportsbook (CZR) also landed in the top 40.

Beyond the download action, the results of the early NFL games are reported to be breaking in the favor of the house. The success of the favorites in the largest spread NFL games on Sunday is seen as a positive for sports betting operators after the hold rate was also forecast to have been strong in week one.

DraftKings (DKNG) is also attracting more attention for its strategic multi-year partnership with Amazon (AMZN) to be the exclusive odds provider for Thursday Night Football on Prime Video. The deal includes DraftKings (DKNG) being featured in the live pregame part of the show that includes sports betting discussion. Roundhill Investments' Will Hershey called the deal strategic with TNF streaming viewers likely to be more tech-savvy and perhaps quicker to make the jump to mobile sports betting. Needham analyst Bernie McTernan said not only does the deal provide new branding for DKNG, but it is also seen as an example of the company attempting to gain share in parlays and catch up to FanDuel.

Sector watch: While the NFL season has been a catalyst for sports betting volume in the U.S., the launch of online sports betting in Ontario is running slightly behind expectations and there are concerns cropping up that California votes may vote No in November on Proposition 27. The measure would allow licensed tribes or gambling companies to offer online sports betting over the Internet and mobile devices to people 21 and older. Still, several analysts have pushed up their forecasts for online sports betting for Q3 and Q4 and stayed positive on the track for 2023 even with consumer discretionary spending at risk. The caution on the sector is tied to close to valuation resets amid higher interest rates than worries about the total addressable market disappointing.

Dig into the holdings breakdown of the Roundhill Sports Betting & iGaming ETF.

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