The sports betting industry is comprised of companies that enable people to make wagers on the outcome of sporting events, such as horse or dog racing, or soccer and football matches. Some companies in the industry operate as sportsbooks, which are bookmakers for sports betting, while other companies provide software and technology platforms allowing other companies to operate as sportsbooks. Many of these companies offer other services, including owning and operating both casinos and online betting services. Some of the biggest names in the industry include DraftKings Inc., Ireland-based Flutter Entertainment PLC., and Caesars Entertainment, Inc.
Sports betting has grown significantly in the U.S. since the Supreme Court revoked a federal ban on the activity in 2018. The U.S. prohibition, which restricted a legal market for wagering on sports to Nevada, had been in place since 1992. Since the lifting of the ban, some state governments have introduced legislation to allow companies to provide legal betting on a broad array of sporting events, both retail and online.
- Sports betting has grown significantly in the U.S. since the Supreme Court revoked a federal ban on the activity in 2018.
- 30 states and Washington D.C. have legal, live sports betting available.
- The sports betting industry has significantly underperformed the broader market over the past year.
The sports betting industry, as represented by the Roundhill Sports Betting & iGaming ETF (BETZ), has significantly underperformed the broader market over the past year. BETZ provided a total return of -52.5% during that period, well below the Russell 1000 Index's return of -12.5%. This market performance figure and all the data in the tables below are as of Sept. 19, 2022.
Here are the top three sports betting stocks with the best value, the fastest growth, and the strongest performance.
These are the sports betting stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
|Best Value Sports Betting Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Light & Wonder Inc. (LNW)||49.47||4.7||1.3|
|MGM Resorts International (MGM)||34.36||13.5||4.8|
|Boyd Gaming Corp. (BYD)||52.71||5.6||10.7|
- Light & Wonder Inc.: Light & Wonder is a gaming and entertainment company. It operates the OpenGaming platform and offers content and products for casinos and other gaming services providers. The company announced Q2 2022 earnings on Aug. 9. Net income attributable to the company surged by more than 29-fold on modest revenue gains year-over-year (YOY). Net income was impacted by a $4.6 billion pre-tax gain on the sale of the company's lottery business.
- MGM Resorts International: MGM Resorts International operates casino, hotel, and entertainment resorts in the U.S. and Macau through its subsidiaries. The company's properties include The Mirage Hotel, Bellagio Resort & Casino, Luxor Resort & Casino, Park MGM, and Mandalay Bay Resort & Casino, among others. MGM reported Q2 2022 earnings on Aug. 3. Net income attributable to MGM Resorts soared to $1.8 billion, benefiting from a gain related to the deconsolidation of MGM Growth Properties LLC. Revenue climbed by 44% YOY.
- Boyd Gaming Corp.: Boyd Gaming owns and operates 28 gaming properties in 10 U.S. states. It also operates entertainment, restaurants, shopping, and recreational facilities on its properties. On Sept. 15, the company announced a quarterly cash dividend of $0.15 per share. The dividend is payable Oct. 15 to shareholders as of Sept. 30, 2022.
These are the top sports betting stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general.
|Fastest-Growing Sports Betting Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|MGM Resorts International (MGM)||34.36||13.5||2,900||44.0|
|Light & Wonder Inc. (LNW)||49.47||4.7||2,960||5.0|
|Bally's Corp (BALY)||24.49||1.2||-30.0||106.4|
- MGM Resorts International: See company description above.
- Light & Wonder Inc.: See company description above.
- Bally's Corp.: Bally's is a casino-entertainment company focused on casino hotels and horse racetracks. It also owns Gamesys Group, an online gaming operator; Bally's Interactive, a sports betting platform; and Monkey Knife Fight, a fantasy sports site. On Aug. 4, Bally's released financial results for Q2 2022. Net income declined even as revenue more than doubled YOY. Strong results from the company's Casinos & Resorts segment were offset by volatility in foreign exchange markets and challenges in the company's Atlantic City hotel and casino operations.
These are the sports betting stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.
|Sports Betting Stocks with the Best Performance|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Churchill Downs Inc. (CHDN)||203.45||7.7||-10.1|
|Boyd Gaming Corp. (BYD)||52.71||5.6||-13.8|
|International Game Technology PLC (IGT)||18.18||3.7||-15.5|
|Roundhill Sports Betting & iGaming ETF (BETZ)||N/A||N/A||-52.5|
- Churchill Downs, Inc.: Churchill Downs is a provider of pari-mutuel gaming entertainment, online account wagering on horse racing, and casino gaming. The company is best known for the premier U.S. racing event, the Kentucky Derby. Churchill Downs announced on Sept. 15 that it would acquire Ellis Park Racing & Gaming for $79 million in cash. Churchill Downs also will assume Ellis Park's opportunity to construct a track extension facility nearby.
- Boyd Gaming Corp.: See above for company description.
- International Game Technology PLC.: International Game Technology is a U.K.-based provider of computerized gaming equipment, software, and networks for all channels and segments of the gaming industry, including lotteries, sports betting, and online casinos.
If you or someone you know has a gambling problem, call the National Problem Gambling Helpline at 1-800-522-4700 or visit ncpgambling.org/chat to chat with a helpline specialist.
The Impact of Regulations on Sports Betting Stocks
The Supreme Court struck down IN 2018 the Professional and Amateur Sports Protection Act (PASPA), the law that drastically curtailed legal sports betting. This opened the door to legalized sports betting across the country. States have acted to legalize the industry at different rates in the last four years. As of May 2022, all but 16 states had either legalized sports betting or were in the process of legalizing it.
The growing number of states that legalize sports betting frequently leads to rising investment and job growth in the gaming, entertainment, and hotel sectors in select areas of each state economy. As the industry evolves, gaming businesses may have to adapt to new regulations, potentially impacting how sports betting is advertised and which sports are included. As a result, investors should keep in mind that this fast-growing industry may not be stable from a regulatory standpoint.
Risks of Sports Betting Stocks
The regulatory status of sports betting is one major risk of investing in sports betting companies. Another is the potential for sports betting to receive massive pushback from the public health sector. Sports betting is expected to grow at a tremendous rate in the coming years, with an analysis by market research firm Data Bridge anticipating nearly $168 billion in growth by 2029. Some analysts predict that this growth will fuel a significant uptick in gambling addiction. These growing health issues could lead to greater scrutiny, legislative restrictions, and stricter regulation.
American Gaming Association. "AGA Commercial Gaming Revenue Tracker."
Supreme Court of the United States. "Murphy, Governor of the New Jersey, et al. v. National Collegiate Athletic Assn. et al."
The Wall Street Journal. "Gambling Firms Race to Expand After Limits Are Lifted on Sports Betting."
YCharts. "Financial Data."
Light & Wonder Inc. "Light & Wonder, Inc. Reports Second Quarter 2022 Results."
MGM Resorts International. "MGM RESORTS INTERNATIONAL REPORTS SECOND QUARTER 2022 FINANCIAL AND OPERATING RESULTS."
Boyd Gaming Corp. "Boyd Gaming Announces Quarterly Dividend."
Bally's Corp. "Bally's Corporation Announces Second Quarter 2022 Results," Page 1.
American Psychiatric Association. "What is Gambling Disorder?"
GlobeNewswire. "Sports Betting Market Size Is Likely to Experience a Tremendous Growth of USD 167.66 billion by 2029, registering a CAGR of 10.26 % by Size and Share, Industry Growth, Regional Outlook, Challenges and Analysis."
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