Posted on: February 9, 2024, 06:11h.
Last updated on: February 9, 2024, 06:11h.
The Super Bowl is Sunday and by some estimates, regulated sportsbook operators could command a handle on the big game of $1.5 billion or more.
That’s the estimate of Macquarie analyst Chad Beynon who arrives at that forecast by estimating that 10% of the more than 160 million adults in the US living in jurisdictions in which sports betting is legal will bet an average of $90 on the Super Bowl. The American Gaming Association (AGA) estimates 68 million American adults will wager an average of $337 on the game, generating $23 billion in bets.
The massive gap between the AGA forecast and Beynon’s handle estimate is explained by the former including wagers placed with offshore sportsbooks, local bookmakers, and those placed on squares and in pools at Super Bowl parties.
Additionally, novice industry observers and investors should note the difference between handle and revenue. Handle is the total amount bet on a game. Revenue is what the gaming companies retain after paying the winners.
Books Want 49ers in Low-Scoring Affair
As of this writing, the San Francisco 49ers are two-point favorites over the Kansas City Chiefs with an over/under of 47.5, according to BetMGM data.
With the Chiefs commanding a massive majority of the bets and the money on the Super Bowl and with bettors’ proclivity for wagering on overs, the desired outcome for sportsbook operators is a 49ers win in low-scoring (under 48) fashion, noted Beynon.
~65% of public bettors are taking the KC Chiefs to win on both the Spread and Moneyline, in addition to ~65% of public bettors taking the Over on the total which sits at 47.5 points. We think sportsbooks will look to reduce this liability as most bets come in closer to kickoff,” observed the analyst.
He added that publicly traded online sportsbook operators such as DraftKings (NASDAQ: DKNG), Penn Entertainment (NASDAQ: PENN), and Rush Street Interactive (NYSE: RSI), among others, “will have up to high-single digit revenue growth upside/downside to consensus estimates” depending on Super Bowl outcome.
Deeper Dive on DraftKings
DraftKings remains the largest pure-play, US-based iGaming and sportsbook operator as measured by market capitalization. As such, the stock is a bellwether for the industry. That coupled with the status of the Super Bowl as the most wagered on sporting event in the US should have the stock in the spotlight following the game.
Beynon said the Super Bowl could stoke as much as 8% upside or 9% downside to consensus first-quarter estimates on DraftKings.
“We note that these results are for North America Online segments/companies only. DraftKings and FanDuel have the largest swings to each outcome given their higher relative proportion of revenue derived from OSB over iGaming compared to other operators,” concluded the Macquarie analyst.
FanDuel is a unit of Flutter Entertainment (NYSE: FLUT).