Upbeat first quarter earnings from several firms operating online sportsbooks has re-injected optimism into the rapidly growing sector, now legal in 33 states. The timing of the industry’s reporting coincides almost perfectly with the fifth anniversary of the Supreme Court’s decision to allow sports betting across the US, a judgement that has driven $220 billion worth of bets on various athletic events.
Though an abundance of wagers has not been hard to come by, profitability has been more elusive for digital bookmakers. That could be about to change, however, as many of their most lucrative markets are maturing and growth in operating and expenses has begun to soften. Each of the top three online sportsbook operators are expected to post profitable quarters by year end, but their relative dominance may begin to push competitors toward strategic acquisitions in an effort to close the gap.
Related ETFs: Roundhill Sports Betting & iGaming ETF (BETZ), VanEck Gaming ETF (BJK)
May 14 will mark the fifth anniversary of the Supreme Court’s decision to strike down the Professional and Amateur Sports Protection Act (PASPA), which effectively legalized sports betting at the federal level in the US. From that decision to March 2023, more than $220 billion has been placed on legal sports bets across the nation, with $95 billion (equivalent to 43.2% of that total) being accrued in just the last year.
Betting handles are now reported across 33 states, and the District of Columbia, which have each legalized a state-wide framework for some form of sports betting. Most bets are now placed through online sportsbooks, with a minority of betting happening in person across the country. The growth of the digital betting industry, which MRP has been covering regularly since the elimination of PASPA, has been the most transformational driver of gambling in the US.
It has taken quite a while for many of the upstart firms maintaining online sportsbooks to begin turning a profit, but by the end of 2023, the Associated Press notes that we may see at least three sports betting contenders in the black.
FanDuel, a subsidiary of Europe’s Flutter Entertainment, was the first online sportsbook to make money, but that wasn’t the case until the second quarter of 2022, about four years after US sports betting operations were legal. As of its most recent earnings report, released last week, growth has…
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