Top sports betting stocks this quarter include NeoGames SA, Melco Resorts and Entertainment, and DraftKings, the stock prices of which have all risen by more than 80% in the past 12 months amid a sports betting boom.
Sports betting companies raked in $2.8 billion in revenue in the first quarter of 2023, a 70% increase over the same quarter a year ago.
The industry's stocks, as represented by the Roundhill Sports Betting & iGaming ETF (BETZ), have kept up with the market over the past year, gaining 6.7% compared to the Russell 1000 Index’s 7% return over the same period.
Below we look at the top three sports betting stocks in three categories: best value, fastest growth, and most momentum. All data are as of May 16.
Best Value Sports Betting Stocks
These are the sports betting stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Sports Betting Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|Light & Wonder Inc
|PENN Entertainment Inc (PENN)||23.18||3.6||5.7|
|MGM Resorts International (MGM)||41.15||15||8.8|
- Light & Wonder Inc.: Light & Wonder is a global leader in cross-platform games with a footprint across six continents. Its OpenGaming platform powers the largest digital gaming network in the industry, connecting players to a portfolio of 4000+ games across more than 60 studios. On May 18, Light & Wonder proposed the complete acquisition of online casino and mobile game maker SciPlay, of which it is already the majority shareholder, for a total value of $422 million.
- PENN Entertainment Inc.: PENN is a North American provider of integrated entertainment, sports content, and casino gaming. It operates 43 properties in 20 states, and online betting in 17 jurisdictions. In February, PENN fully acquired the sports blog Barstool Sports. PENN reported a 7% year-over-year increase in revenue in the first quarter of 2023, offset by narrower margins from a revenue shift toward higher-tax jurisdictions.
- MGM Resorts.: MGM is a global gaming and entertainment brand, with a portfolio of 31 unique hotel and gaming destinations across the world. MGM China’s net revenue surged 130% in the first quarter of 2023 after the country relaxed Covid restrictions. And a travel rebound helped increase MGM's Las Vegas revenue by 31% in the same period.
Fastest Growing Sports Betting Stocks
These are the top sports betting stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 1,000% were excluded as outliers.
|Fastest Growing Sports Betting Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|PENN Entertainment Inc
|Churchill Downs Inc (CHDN)||286.72||10.7||279||54|
|VICI Properties Inc (VICI)||31.1||31.2||49||111|
- PENN Entertainment Inc.: See company description above.
- Churchill Downs.: Churchill Downs owns and operates 21 casinos and horseracing properties, the most famous being its namesake track, home to the Kentucky Derby. In April, Churchill Downs sold $600 million in senior notes and said it would split its stock 2-to-1. It also reported a jump in revenue mostly attributed to the acquisition of Peninsula Pacific Entertainment LLC and its properties in New York, Iowa, and Virginia.
- VICI Properties Inc.: VICI is a real estate investment trust (REIT) that owns some of Las Vegas's most recognizable casinos: Caesars Palace, the MGM Grand, and the Venetian. The company’s portfolio is comprised of 49 gaming facilities, with over 124 million square feet of entertainment including 60,000 hotel rooms and 450 restaurants, bars, and nightclubs. On May 17, VICI announced the acquisition of four properties in Alberta, Canada, in a transaction valued at $165 million.
Sports Betting Stocks With the Most Momentum
These are the sports betting stocks that had the highest total return over the past 12 months.
|Sports Betting Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|NeoGames SA (NGMS)||27.16||.9||125|
|Melco Resorts and Entertainment Ltd (MLCO)||11.3||4.9||116|
|DraftKings Inc (DKNG)||22.92||10.6||84|
|Roundhill Sports Betting & iGaming ETF (BETZ)||N/A||N/A||4.6|
- NeoGames SA.: NeoGames is an iLottery and gaming services provider to regulated lotteries and gaming operators. On May 14, NeoGames announced that it was being acquired by Aristocrat Leisure Limited for $1.2 billion.
- Melco Resorts and Entertainment.: Melco develops, owns, and operates integrated entertainment and resort facilities in Asia and Europe. For the first quarter of 2023, Melco reported a 51% increase in revenue year-over-year due to the relaxation of COVID restrictions in Macau. Operating income was $0.4 million, swinging back to positive territory after a loss of $136 million in the prior year.
- DraftKings Inc. Based out of Boston, DraftKings is a digital sports entertainment and gaming company with partnerships with the NFL, NHL, PGA, UFC, NBA, MLB, and NASCAR. DraftKings’ platform is available across 44 states, certain Canadian provinces, and the United Kingdom. DraftKings increased monthly active players and average revenue per player in the first quarter, leading it to raise its 2023 revenue guidance to a range of $3.14 to $3.24 billion, up from prior estimates of $2.85 to $3.05 billion.
Key Trends in Sports Betting
Since 2018, when a Supreme Court ruling granted individual states the right to regulate sports betting within their borders, sports betting has been legalized in 36 states, with 26 of those states allowing online sports gambling. Only 11 U.S. states have no pending sports betting legislation or dead legislation.
And it’s no wonder, given that the global sports betting market is expected to grow at a compound annual rate of over 10% to reach $182 billion by 2030. States like Illinois and New Jersey have already surpassed $1 billion in sportsbook taxes, while on the Federal level, $953 million has been generated in taxes from online sportsbooks.
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 public health advocates, who expect the increased accessibility of sports betting to fuel an uptick in gambling addiction.
American Gaming Association. "AGA Commercial Gaming Revenue Tracker."
Businesswire. "Light & Wonder Announces Proposal to Acquire Remaining Public Shares of SciPlay."
PENN Entertainment Inc. “PENN Entertainment Reports First Quarter Results.”
MGM Resorts International. “MGM Investor Relations.”
MGM Resorts International. “MGM RESORTS INTERNATIONAL REPORTS FIRST QUARTER 2023 FINANCIAL AND OPERATING RESULTS”
Churchill Downs Inc. “Churchill Downs Incorporated Reports 2022 Fourth Quarter and Full Year Results”
- VICI Properties Inc. “VICI Properties Inc. to Acquire Four Properties in Alberta Canada in Sale-Leaseback Transaction With Century Casinos, Inc.”
NeoGames SA. "NeoGames Enters into Definitive Agreement to be Acquired by Aristocrat for $29.50 per Share in Cash."
Melco Resorts and Entertainment. “Melco Announces Unaudited First Quarter 2023 Earnings.”
DraftKings Inc. “DRAFTKINGS REPORTS FIRST QUARTER REVENUE OF $770 MILLION; RAISES 2023 REVENUE GUIDANCE MIDPOINT TO $3.185 BILLION AND IMPROVES 2023 ADJUSTED EBITDA GUIDANCE MIDPOINT TO ($315) MILLION.”
American Gaming Association. "Interactive U.S. Map: Sports Betting."
Grand View Research. "Sports Betting Market to be Worth $182.12 Billion by 2030."
- Michigan Journal of Economics. "The Economic Ramifications of Online Sports Gambling in the U.S."
Pew Trusts. "As Sports Betting Grows, States Tackle Teenage Problem Gambling."