Super Bowl to Generate $1.7 Billion in Legal Bets, Says Macquarie
This year, the Super Bowl is expected to generate $1.7 billion in legally placed wagers, with DraftKings (NASDAQ: DKNG) identified as the gaming stock offering the greatest downside or upside exposure to the major event.
This is based on a recent report by Macquarie analyst Chad Beynon. In the note, Beynon mentioned that with 160 million American adults having access to regulated sports betting, Super Bowl LIX is expected to produce $1.7 billion in legal wagers, an increase of 11% compared to last year's game. Macquarie projects that around 11% of adults in the US will wager a minimum of $100 on the NFL championship game.
"We think books will look to reduce their liability with most betting occurring closer to Sunday’s kickoff. If current trends stand, we estimate DKNG will have the highest exposure at +/-3.5% to current 1Q US cons revs based on various scenarios we analyze,” observes Beynon.
DraftKings and Flutter Entertainment's (NYSE: FLUT) FanDuel represent the two leading online sportsbook operators in the United States. The pair and their competitors might benefit from some respite during the Super Bowl after enduring what was commonly referred to as a “customer-friendly” fourth quarter.
Chiefs, Supporting Will Aid Sportsbooks
As per Macquarie's estimates from Tuesday evening, sportsbooks' largest Super Bowl liabilities were on the total exceeding 48.5 and betting on the Philadelphia Eagles' moneyline. In other words, gaming firms probably prefer the Kansas City Chiefs to triumph in a match with few points.
The same could apply to investors in DraftKings and Flutter, although it's undeniable that their stocks have risen over 12% and 3.42%, respectively, during the last month. If the books achieve their target outcome, it may lead to a hold rate of 22% or around $365 million in gross gaming revenue (GGR) and $255 million in net gaming revenue (NGR), as stated by Beynon.
The analyst stated that if the Eagles win and the over comes through, it might result in a hold rate of -4%. DraftKings’ revenue for the first quarter may increase or decrease by 3.5% depending on Super Bowl exposure.
According to Beynon, Flutter’s risk is roughly half that of Rush Street Interactive (NYSE: RSI), which stands at 1%.
Additional Super Bowl Elements to Monitor
The Super Bowl stands as the most heavily bet on singular sporting event in the US, indicating its significance for sportsbook operators’ first-quarter performance; regardless of whether the outcomes are positive or negative, the game also represents a prime chance for customer acquisition.
"While material to 1Q earnings, the more important opportunity rests in customer acquisition through campaigns like FanDuel’s “Kick of Destiny 3,” said Beynon. “For data provider Genius Sports (NYSE: GENI), we see less risk given its payment model and upside from in-play betting momentum spurred by big events like the Super Bowl, with in-play expected to grow at a compound annual growth rate of 31% through 2030.”
Predictions suggest that the total number of bets placed on Super Bowl LIX will reach an all-time high, although the average bet amount is expected to decrease this year.
