Predictions that college and professional football bets will triple have caused the shares of DraftKings, Penn National Gaming, and Caesars Entertainment to have rallied more than 20% in the past three weeks.
Yaniv Sherman, US Head of betting platform 888 Holdings said: “It’s very seldom to see the market segment grow in front of you so quickly. There’s no way around it. The US represents the biggest regulated online gaming opportunity in recent history.”
Investors’ profit isn’t guaranteed though. On top of the millions spent on expensive advertising campaigns, the competition and the promotions that reward first-time users make it difficult to turn a profit.
Sportsbooks do generate revenue, but not necessarily a profit; they can’t control what happens in a given game or season, they can only make money by moving odds, aiming for a balance of gamblers on both sides of a given wager.
But during the pandemic, companies with online betting exposure have gained even more attention and interest than before.
Wall Street, however, is uncertain regarding future gains, as data compiled by Bloomberg shows DraftKings’ shares are expected to gain only 13% over the next 12 months.
CEO at SpringOwl Asset Management, Jason Ader, commented: “There will be massive sector growth, but the reason to be sceptical in the medium-term is that you can’t spend more money than you’re making forever. It’s going to be fun for the bettors. For the shareholders of the company? We’ll see.”
