US betting market may be getting too crowded, analysts warn

As Florida takes a step closer to getting sports betting, Wall Street analysts warned that revenue from the industry is up but the playing field is getting too large and crowded

By Buck Wargo – SiGMA US correspondent

The Florida Senate on Tuesday approved a compact with the Seminole Tribe, and the House is poised to also give its green light. Before the final go-ahead, the legislation would require approval from the Department of Interior to allow a tribe to offer mobile sports betting off tribal land. That is still not guaranteed and lawsuits could also halt any implementation.

A new report issued by Truist Securities show that US sports betting gross gaming revenue rose 46 per cent in March compared to February due to the strength of NCAA Basketball’s March Madness and a full month of the NBA and NHL along with MLB spring training. In addition, iGaming rose 22 per cent and topped $300 million for the first time.

“We’ve come a long way three years after PASPA’s repeal,” said analyst Barry Jonas is reference to the US historic Supreme Court decision three years ago.

However, analysts said sports betting has dropped off since March Madness and will level-off over the summer before gearing up for the American professional and college football seasons in the fall.

Shaun Kelley, an analyst with Bank of America, said he’s concerned with sports betting and iGaming over the number of new entrants that will be coming this fall heading into the NFL season. There’s also some concerns about a weaker sports calendar, waning state legislative momentum.

Caesars Entertainment, which acquired William Hill, will launch a more fully integrated platform in multiple states, Kelley said. Penn National/Barstool will be live in eight states. Rush Street and Golden Nugget will further invest in sports as a way to bolster iGaming. Others are raising capital for growth.
DraftKings, BetMGM and FanDuel are among the market leaders investing a total of $1 billion a year.

“Gaming stocks have been volatile of late, particularly those exposed to the sports-betting theme, which has tracked the sell-off in other high-growth areas in the market,” said Kelley, who pointed to Penn National and DraftKings down more than 40 per cent from March highs.

Brendan Bussmann, a consultant for Global Market Advisors, said most state legislative sessions are closing out for 2021 and there is no movement for sports betting in Texas, Missouri and Alabama. Sports betting debates will continue in Nebraska, Louisiana, Maine, Connecticut, and Ohio, while New York is waiting for a request for proposals to move forward.

Some 30 states and jurisdictions have legalised sports betting in some form.
Works in progress is Ohio with a pending sports betting bill allowing up to 20 land-based and mobile licences.

In evaluating US sports handle in March, New Jersey led the way at 19 per cent followed by Nevada and Illinois at 14 per cent and Pennsylvania at 12 per cent. Some 87 per cent of the handle came from mobile wagering.

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