Published on: November 6, 2024, 11:37h.
Last updated on: November 6, 2024, 11:37h.
Sports betting stocks surged on Wednesday following the approval of an amendment in Missouri to legalize regulated sports wagering.
During midday trading, DraftKings (NASDAQ: DKNG) saw a 3% increase in shares, while FanDuel parent Flutter Entertainment (NYSE: FLUT) rose by 2.51%. Both companies heavily invested in Amendment 2, which allowed voters to have a say on sports betting in Missouri.
Amendment 2 was presented to voters after failed attempts by Missouri politicians to enact sports wagering legislation. The amendment includes a $500,000 licensing fee, a five-year permit term, and a 10% tax on gross gaming revenue (GGR).
Following DraftKings and Flutter, Caesars Entertainment (NASDAQ: CZR), Penn Entertainment (NASDAQ: PENN), and Rush Street Interactive (NYSE: RSI) also experienced a rally due to Missouri’s decision. Rush Street, already a top performer in the gaming industry this year, saw a 5.11% increase.
Missouri Lifts 2024 Sports Betting Legislative Spirits
Expectations were low for sports betting legislation approvals this year, with Georgia being a potential candidate. However, Missouri emerged as the only state in 2024 to pass such legislation, impacting around 2% of the population,” said Stifel analyst Steven Wieczynski.
Based on polling data, it was assumed that there was a 50:50 chance of passage. With legislative momentum slowing down after years of expansion, Missouri’s move was significant in the industry,” he added.
Wieczynski mentioned that adding retail sportsbooks at land-based casinos could benefit operators like Century Casinos (NASDAQ:CNTY), Boyd Gaming (NYSE: BYD), Penn, and Caesars. Physical sportsbooks in Missouri could attract residents currently visiting casinos in Illinois and Kansas.
“The license & tax structure in Missouri is favorable and different from recent trends of higher tax rates,” Wieczynski noted.
Another Vote Helped Caesars, Penn
Caesars Sportsbook and Penn’s ESPN Bet are likely contenders for online sports betting licenses in Missouri. Another vote in the state that saw the rejection of a proposition for a new casino license at Lake of the Ozarks may have also contributed to gains for these stocks on Wednesday.
Caesars runs three gaming venues in Missouri, while Penn operates one with a couple more near the Illinois border, indicating that stocks reacted positively to voters rejecting potential new competition.
Boyd and Century, with their presence in Missouri, also saw an increase in trading values at current rates.