One of the best ways to make money with sports betting is to invest in a home.
The popularity of sports betting is rapidly increasing. According to the American Gaming Association, it has been legalized in well over half of the states in the United States, and as of January 2024, four more states are actively working on legislation to legalize it. Industry revenue rose 46.6% to $9.2 billion in the first 11 months of 2023, AGA said. Americans have bet more than $106 billion on sports by the end of November 2023.
The Super Bowl, scheduled for February 11th, is expected to set gambling records. More than 67 million Americans are expected to bet $23.1 billion on the 2024 games, according to the AGA.
Here are five ways to invest in the hot sports betting market.
1. Sportsbook app
The most obvious places to check are companies directly involved in sports betting, such as those operating apps that allow bettors to put money down. If you want to tap into this growing market, this is probably your best bet. Here are the top players.
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DraftKings (DKNG): The company is one of the largest companies in the sports betting space, with a market capitalization of over $20 billion as of February 2024. According to the company, its market share is almost 40% as of September 2023 and continues to grow. In states where sports betting has been legal for several years.
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Flutter Entertainment (FLUT): You may not know the company's name, but you've probably heard of their fantasy sports site and sportsbook, FanDuel. The company says FanDuel has about 43% of the U.S. online sports betting market. Flutter has other famous online gaming names such as PokerStars and Betfair.
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Rush Street Interactive (RSI): Rush Street is a relatively new and smaller name on the public market, with a focus on online gaming and sports betting.
You may also find other players in sports betting who may also be running other large businesses.
The Walt Disney Company (DIS), for example, launched its own sports betting app to leverage the ESPN brand. However, sports betting is just one part of this large, diversified company. Privately held media company Yahoo is also leveraging its position in fantasy sports to offer bettors a Yahoo-branded sportsbook powered by BetMGM. Still, you are unlikely to get the same “profit” from this type of company when compared to the “pure play” opportunities available in betting.
2. Game company
Another way to capitalize on the rise of sports betting is to invest in larger gaming companies, more informally known as casinos. Many casinos operate sportsbooks or online sportsbooks, but they also invest in gambling and hotel operations, so they don't have intensive exposure to sports betting. Some of the top players listed here include:
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Caesars Entertainment (CZR): The company operates dozens of other properties in addition to its namesake property on the Las Vegas Strip. It acquired UK-based bookmaker William Hill in 2021, but quickly sold its international operations to focus on US sports.
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Penn National Gaming (PENN): Penn is known for its non-Las Vegas properties in smaller markets across the United States, but it has also been active in the online sports betting market. The company acquired a 36% interest in Barstool Sports in 2020, and then acquired the entire company in February 2023. However, in August 2023, the company sold the company back to Barstool founder David Portnoy and announced a new sports betting partnership with ESPN.
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MGM Resorts International (MGM): The company operates casinos on the Las Vegas Strip as well as many others that bear its name, including the Mirage. He also operates online gambling and sports betting through the BetMGM site.
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Las Vegas Sands (LVS): The company operates some of the world's most popular casino companies, including Marina Bay Sands and the Venetian Macau. Although the adoption of online gambling and sports gambling has been slow, entry into this space is beginning.
3. Game ETF
If you're looking for broader exposure to gaming, including sports gambling, online gaming, and traditional physical locations, you might also choose a gaming ETF. With ETFs, you don't have to pick winners, you get broad exposure to the sector, and you could potentially benefit if more people travel or go to the casino. Here are two of his funds focused on this area.
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Round Hill Sports Betting and iGaming ETF (BETZ): This new fund focuses on sports betting and online gaming, so it's a good choice if you're looking for a more pure experience in this sector. However, the expense ratio is quite high at 0.75%.
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VanEck Vectors Gaming ETF (BJK): The fund offers a broad sample of betting companies, including popular sports betting companies and traditional casino operators. The fund's expense ratio is 0.72%.
ETFs can be a good option for those who simply want to bet on the growth of an entire sector.
4. Racecourse
If you're interested in horse racing, there are excellent listed options and it's an industry icon.
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Churchill Downs (CHDN): The names associated with the Kentucky Derby have more meaning than just this annual race. The company operates TwinSpires, an online platform for sports betting, including horse racing. Additionally, many locations offer more traditional casino games, so it's not just a one-trick pony.
5. Technology provider
In addition to investing directly in gaming companies, you can also invest in companies that provide the technology behind the games. It's like investing in a gold rush “grab” company. Below are some popular names.
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Gun (GAN): The company provides a variety of gaming software to the industry, including leaders such as FanDuel. It not only supports sports betting, but also online gambling and virtual simulation games.
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Kambi Group (KMBIF): This company is another “name behind the name” that provides sports betting technology to online and traditional casinos.
risk
When investors are considering investing in individual stocks or the gaming industry as a whole, it's important to be aware of the risks. Here are a few that are particularly relevant to sports betting investments today.
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Taxes and regulations: Gambling is a highly regulated area of the economy. States are becoming increasingly open to online gaming and sports betting, but they often impose onerous restrictions on these types of businesses, including high taxes. Many states see legalized gambling as a way to raise tax revenue, often imposing high taxes on areas where many citizens disregard the social value of gambling.
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evaluation: As with any investment, you need to be careful about the price you pay for potential returns. Many investors are flooding into the sports betting market with strong expectations for growth over the next decade. They have already inflated prices so much that future profits may be much less attractive or even non-existent.
As with any investment, you should carefully consider various other factors before jumping into the market.
conclusion
Sports betting is growing in popularity and can be an attractive investment, especially as new formats such as app-based betting expand. But investors have other avenues to play in this space, and investors who want to play extensively with their bets also have ETFs.
Editorial Disclaimer: All investors are encouraged to conduct their own independent research on any investment strategy before making any investment decisions. Additionally, investors should note that past performance of an investment product does not guarantee future price appreciation.
