Even though the Super Bowl is over, sports betting stocks still have plenty of upside. Viewers were bombarded with several sports betting promotions during this year’s Super Bowl. That was expected, given that the sports betting industry has seen significant expansion in recent years, reaching $83.65 billion in 2022. With this market forecasted to grow at a compounded annual growth rate of 10.3% through 2030, stocks in the sector have room to move much higher.
The legalization of sports betting in more than two dozen states has led to a surge in demand for sports betting services, and as a result, sports betting stocks have become increasingly popular. Maine and Nebraska are currently weighing whether to legalize sports betting, with several other states aiming to do so in 2024.
In short, the growth potential of the industry and the potential for impressive returns make sports betting stocks an intriguing investment.
| CZR | Caesars Entertainment | $52.63 |
| RSI | Rush Street Interactive | $4.02 |
| PENN | PENN Entertainment | $31.18 |
Caesars Entertainment (CZR)
Caesars Entertainment (NASDAQ:CZR) is a well-known entertainment stock serving the hospitality and gaming industry. The company is best known for its casinos and resorts across the United States and internationally. Indeed, CZR stock was impacted by the COVID-19 pandemic, forced to temporarily shutter its locations. But with the pandemic over and sports betting continuing to grow, its prospects look much more substantial.
Caesars Entertainment’s Caesars Sportsbook offers a comprehensive sports betting platform that allows users to place bets on various sports events, including football, basketball, baseball, hockey, combat sports, horse racing, and more. The app allows users in states where online betting is legal to place wagers on those events and to fund their accounts quickly.
Recently, the company has shared some important positive news with investors. Caesars Entertainment’s sports betting business became profitable in October of 2022. That was a year ahead of schedule, and speaks to the exceptional demand being seen in this specific market. Caesars invested $1.1 billion in its digital segment, which is expected to provide EBITDA at 50% of that investment at maturity.
Rush Street Interactive (RSI)
Rush Street Interactive (NYSE:RSI) is a gaming company that operates online casinos and sports betting platforms in the United States. The company’s stock has been volatile since its initial public offering in 2020 and currently trades at about half of its IPO price. That said, RSI has partnerships with major sports teams and media companies that could catalyze further growth.
Rush Street Interactive offers online sports betting in 21 U.S. states, Colombia, Mexico, and Ontario. In addition, the company provides retail sports betting in 10 states. The company also operates an online casino in 18 states and three international sites, with plans to potentially move into Brazil, Argentina, and Peru.
The company boasts a compound annual growth rate of 129% from Q2 ’19 to Q3 ’22, with $148 million in sales in the latest quarter. The company’s NBA, NFL, and NHL partnerships could also lead to future growth opportunities. Overall, Rush Street Interactive is a smaller sports betting stock, but that implies it has the potential to see outsized increases as well.
PENN Entertainment (PENN)
PENN Entertainment (NASDAQ:PENN) is another highly respected gaming stock. The company operates numerous casinos and racetracks across the United States and expanded into the online gaming space when it acquired Barstool Sports. That acquisition was recently completed. That’s important because PENN and Barstool announced a sports betting and iCasino partnership in early 2020, which provided for a path to full brand ownership that has now been realized.
PENN Entertainment comprises 43 properties in 20 states, along with sports betting and iCasino assets in 16 and 5 jurisdictions, respectively. The company is a diversified investment within the gambling industry due to that mix of assets.
Barstool Sportsbook and Casino is a sports betting business offering one of the most comprehensive platforms. It covers major American sports but also touches on niche sports, including rugby union, lacrosse, and darts.
PENN Entertainment was relatively stagnant in the fourth quarter, with revenue growth of 0.8% year-over-year. That said, the company expects sales to reach between $6.15 billion and $6.58 billion in 2023. The company also repurchased $91 million worth of stock in the fourth quarter. Overall, the company’s recent acquisition of Barstool Sports is intriguing, as online betting continues to be legalized across the U.S.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.