US Sports Betting Providers Part of June's Stock Sell-Off

There has been no shortage of positive news associated with the U.S. legal sports betting industry since the Supreme Court overturned their blanket ban on sports wagering in 2018. Betting providers, people that staff the sportsbooks and even the jurisdictions that house sports betting platforms have benefited greatly - from revenues to job creation to the immense amount of tax dollars that have flowed in since legalization four years ago.

30 states plus Washington, D.C. now have their own legal sports betting platforms with providers like DraftKings, FanDuel, MGM, Caesars and Penn National having a presence in most. All together, they have been part of an industry that has taken in an estimated $125 billion in the U.S. alone during the just-over four years since legalization.

But beneath all of the good news has been the recurring issue of sliding stock prices for the high-level, publicly traded sports betting operators. Gross revenues for sportsbooks have been fine, but the cost of doing business keeps rising, while stock prices keep falling.

The bottom line is that investment in stock is risky… especially companies within the U.S. legal sports betting space. Those within investment and legal sports betting circles have seen nothing but growth of the industry since 2018 and wonder why the slump persists.

Let's take a peek at how some of the publicly traded sportsbooks fared in June, during a time of major stock sell-offs in a variety of sectors around the country.

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DraftKings

DraftKings' stock struggles have been well documented. 2021 DraftKings stock fell an astonishing 72% alone. But sales were up 34% to $417 in quarter 1 that ended March 31 which, in theory, should have meant some better stock news.

A stock spike hasn’t happened just yet for DraftKings and in fact, investment in the company keeps disappointing, even in the post-COVID world. The stock was down 18.6% in June and closed under $11 per share at one point during last month.

The good news for DraftKings is their earnings and their commanding the second biggest market share in the U.S. market. That news has to led to a stock rebound sometime – doesn’t it?

Other positive news is that DraftKings is all-in on California. Sports betting legalization could come on the November election ballot. DraftKings is poised to get a huge chunk of that enormous sports betting market.

FanDuel

FanDuel stock dropped about $11 in June to $99.64 on July 1 – that’s about a 7.7% slide. Their parent company Flutter continues to struggle in European markets which is dragging the stock down. FanDuel itself has been terrific in gaining the biggest market share in the American legal sports betting industry.

Flutter stock started 2021 at $186 bucks a share and ended the year closed under $100 on July 1. It is another betting provider that should see a strong stock rebound sooner than later. Just how much remains to be seen.

FanDuel holds about a 37% market share in the U.S. market and is responsible for about 25% of the New York market, which has become a guaranteed $1 billion per month. The company is also primed to be a big player in the potential California market, which is expected sometime in 2023.

MGM

MGM stock didn’t suffer nearly the monthly drop-off that some of their competition did. Their stock was at $34.19 on June 1 and was $30 on July 1. Year-over-year, the MGM Resorts International stock is down about $11 and is about $18 lower than the stock’s height of $48.54 in November 2021.

For the first quarter of this year, the company beat almost all of Zack’s estimates for earnings and is expected to build momentum with the return of travel and capacity limits for their global properties. Opening up California’s legal sports betting market would also help the company’s bottom line.

Caesars

Caesars stock is another that has had a tough year. The company's stock has dropped 62.78% the last 12 months and dropped 26.16% in June alone.

COVID-19 hit the company hard - their properties have taken a bath the last year. Hopes are that the return of tourism in Las Vegas and elsewhere can prop up the overall Caesars numbers. Their Q1 figures showed a surprising revenue increase of 1.86% quarter-to-quarter, so the company seems to be trending in the right direction.

Like DraftKings, FanDuel and MGM, Caesars has the benefit of being a major player in the U.S. legal sports betting space. Having a strong presence in the lucrative New York market and having a possible presence in California should, in theory, mean that Caesars Sportsbook is on a good path going forward.

Penn National

Penn National is officially part of the Sports betting provider stock slump. On July 6, 2021, Penn National stock was at $74.40. Yesterday it closed at $30.76. Their stock dropped 9.68% in June alone.

But like the other stocks discussed, the post-COVID world should mean good things for Penn National. Revenues for the quarter that ended March 31 came in at $1.56 billion, which is 23% higher than the previous quarter. People are returning to casinos, sports betting is getting more popular and brands like Barstool Sports and theScore are prime for breakouts – the latter has been terrific for the company in the newly opened Ontario market.

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