Since the 2018 Supreme Court ruling that paved the way for legalized sports betting in the United States, sportsbooks in the 38 states where wagering is legal have generated over $24 billion in revenue, according to The Motley Fool's research. Plus, states that have legalized sports betting have received $4.33 billion in tax revenue since 2018. Several states that don't currently allow sports gambling have plans to legalize it or have already passed legislation, and the added revenue potential could lead to more revenue to be had.
With that in mind, here are four companies that are making millions from sports betting, all of which could see revenue climb even higher as the trend toward widespread legalization continues.
4 stocks that can let you profit from legalized sports betting
I won't keep you in suspense. Here are my four top companies that make money from legal sports betting, listed in no particular order.
1. Flutter Entertainment
Flutter Entertainment(NYSEMKT: FLTR) isn't exactly a household name, but you've probably heard of its main U.S. brand, FanDuel. It's the most popular sports betting site in the United States, and it also has a large share of the iGaming market. FanDuel has more than 4 million monthly U.S. players and partnerships with virtually every major U.S. sports league, and, perhaps most importantly from an investor's perspective, it generates 43% more margin than its peers.
2. DraftKings
DraftKings(NASDAQ: DKNG) has the No. 2 market share in online sports betting, and it also operates an online casino. Unlike Flutter, it's only a domestic company, so it might be a better choice if you specifically want to invest in the legalized U.S. sports betting trend.
The company could have plenty of room to grow. It operates in only 26 states, and its revenue per monthly unique payer increased by more than 6% in 2023, indicating that user engagement is improving. Revenue grew by 44% in the fourth quarter, and it expects over 30% revenue growth in 2024, as well as positive free cash flow.
3. MGM Resorts
One of the leading brick-and-mortar casino operators, MGM Resorts(NYSE: MGM) has a massive presence on the Las Vegas Strip and operates some of the most impressive regional gaming properties in the United States, plus a few in Macau. It also has a large online sports betting presence thanks to its BetMGM joint venture with U.K.-based Entain.
One thing MGM Resorts is doing a particularly good job of is forming potentially valuable partnerships. For example, on certain Carnival Cruise Line(NYSE: CCL) ships, you'll find BetMGM kiosks.
MGM could have quite a bit of growth potential. It plans to develop a first-of-its-kind gaming resort in Japan, and it also has a large redevelopment project under way, turning New York's Empire City Casino into a large-scale casino branded as MGM Empire City. There's still a lot of potential in online gaming as well, and with BetMGM achieving profitability in the second half of 2023, the bottom line is heading in the right direction.
4. Sportradar Group
Sportradar Group(NASDAQ: SRAD) isn't actually a gaming operator, but it could be one of the most interesting ways to invest in legalized gaming.
Specifically, Sportradar is the leading provider of services to the sports betting industry, offering live data and odds, programmatic advertising, audiovisual content, betting tools, and more. It covers over 900,000 sporting events annually, and its customers include hundreds of sports betting companies, professional sports leagues, and media companies. With a net revenue retention rate of well over 100%, it's clear that customers are finding tremendous value.
How much larger could sports betting get?
The sports betting industry has grown rapidly, with wagers surpassing $100 billion for the first time in 2023. However, there could still be plenty of room for the market to grow.
In fact, the global sports betting market generated an estimated $81.7 billion in revenue in 2022 and is expected to grow to roughly three times that size by 2032. And all of the companies discussed here could be in an excellent position to profit.
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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sportradar Group Ag. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
