Sports betting trends and potential upcoming catalysts

There have been little indications that consumer spending headwinds are having a major impact on the sports betting sector during the crucial fall NFL and college football seasons.

Early reports indicate a boost in betting volume and improved hold rates, particularly with NFL games. Macquarie estimated total sports betting market hold of 12% during the week of Sept 16–22. A strong hold rate of 15% for NFL games helped to offset the 9% hold rate seen in all other sports.

Interestingly, the hold rate for sportsbooks in New York has broken sharply higher during the last three weeks of NFL football being in the mix. Macquarie analyst Chad Beynon noted that FanDuel (NYSE:FLUT) led the way with an impressive weekly hold rate of 19%. Beynon and his team have DraftKings (NASDAQ:DKNG) highlighted as a top online stock to own during the NFL season because it is most exposed to near-term upside from favorable NFL game outcomes, higher structural hold, and general online sports betting/iGaming growth momentum.

The estimated online sports betting market share breakdown for August was 41% for FanDuel (FLUT), 34% for DraftKings (DKNG), 7% for BetMGM (MGM) (OTCPK:GMVHF), 5% for Caesars Sportsbooks (CZR), and 3% for ESPN Bet (PENN). In iGaming, DraftKings (DKNG) and FanDuel (FLUT) are estimated to have held 25% market share, followed closely by BetMGM (MGM) (OTCPK:GMVHF) at 20%.

Looking ahead to November, the election in Missouri will include an amendment on sports betting legalization. Eilers & Krejcik Gaming estimated that Missouri sports betting handle would be $3.4 billion and operators will see a hold rate of 9.8%. “Our study shows that Missouri has the potential to create a competitive, fast-growing sports betting market,” highlighted Managing Director Chris Krafcik. When the calendar flips to December, analysts anticipate the extra two weeks of college football playoffs to be a boost.