Published on: January 6, 2025, 06:00h.
Last updated on: January 6, 2025, 06:00h.
The beginning of the new year has not shown much promise for the approval of iGaming in new states according to an analyst.
Deutsche Bank analyst Carlo Santarelli mentioned in a recent report on DraftKings (NASDAQ: DKNG) that the operator’s ability to meet or exceed 2025 earnings and revenue guidance will be crucial due to little legislative action expected to boost the company’s shares.
Considering the current valuation and challenges in meeting guidance in 2024, achieving the 2025 target will have a significant impact on the stock,” stated the analyst. “Failure to meet 2025 guidance could raise doubts about longer-term EBITDA targets, potentially affecting the company’s valuation.”
Texas plays a significant role in the sports betting legislative landscape, as failure to approve wagering this year could delay the process until 2027. Commercial operators like DraftKings will need partnerships with tribal gaming entities to enter markets such as California and Florida, yet the terms may not be favorable.
iGaming Expansion Forecast
Only seven states currently allow online casinos, and no new states joined the list in 2024.
Santarelli suggested that six states may consider iGaming legislation in 2025, but only two are likely to approve it. The largest states among the six are less probable to legalize online betting.
“Ohio and Maryland have the best chance for success in 2025, but it’s unlikely that any new states will legalize iGaming this year,” noted the analyst. “New York and Illinois, being the largest states in the discussion, have the lowest chances of success.”
The list excludes Wyoming, where iGaming legislation was recently introduced. However, due to the state’s small population, approval of online casinos would have minimal impact on DraftKings and its competitors.
Potential for Acquisitions
DraftKings, with its strong financial position and minimal debt, could pursue mergers and acquisitions to drive growth, especially if it faces challenges in meeting near-term targets.
“Acquisitions are likely to play a key role in DraftKings’ strategy, particularly if achieving 2025 or 2026 targets seems challenging,” mentioned Santarelli.
Last year, DraftKings acquired Simplebet Inc., a microbetting services provider, and online lottery firm Jackpocket.