NFL preview: DraftKings, FanDuel, Fanatics, BetMGM, and ESPN Bet are in the spotlight

The NFL season begins this week with DraftKings (NASDAQ:DKNG) looking to close the U.S. online sports betting market share gap between itself and sector leader FanDuel (FLUT).

In July, Bank of America estimated online sports betting share at 42% for FanDuel (FLUT), 34% for DraftKings (DKNG), 7% for BetMGM (MGM) (OTCPK:GMVHF), 5% for Caesars Sportsbook (CZR), and 3% for ESPN Bet (PENN). Notably. ESPN Bet launched online sports betting in New York in August, which should help boost its national market share by a significant amount. Fanatics and Rush Street Interactive (RSI) are also scrapping for market share.

Meanwhile, Needham tracked online sports betting app downloads. In the four weeks heading into the NFL season, FanDuel (FLUT) has had a slight lead over DraftKings (DKNG), similar to last year, according to analyst Bernie McTernan. BetMGM was noted to be in fourth position over the past weekend, marking a resurgence. Fanatics had been third in the pre-season until the most recent week, when it fell to sixth, per the Needham tracking.

Needham’s overall view is that the legislative environment is overall supportive of greater market access, as it’s a win-win for consumers and states. “We see upside to our bull case industry TAM for $50B, for which we see a higher likelihood playing out than our bear case of only $18B. Within this market, we believe DKNG has a sustainable customer acquisition strategy that should continue to drive its first- or second-place position in all states.” Needham expects margins to scale with from tech stack ownership, benefits of national vs. local marketing, and reaching terminal market access penetration.

Needham also called out some bets as particularly attractive heading into the NFL season, including the New York Giants -135 to win under 6.5 games, Marvin Harrison Jr. +185 for the most receiving yards for a rookie, and CJ Stroud +650 to be the league leader in passing yards.

Last week, DraftKings (DKNG) announced that it entered into an agreement to acquire Simplebet Inc. for an undisclosed amount. New York-based Simplebet is described as a leading sports betting provider of in-play micromarket content and pricing. Founded in 2018, Simplebet is a B2B provider of micromarket pricing for the NFL, MLB, NBA, NCAA football, NCAA basketball, and the NHL. The platform has attracted attention by recording millions of wagers and partnerships with major sportsbooks and positioning itself as a significant player in the evolving landscape of in-play betting. The deal is seen allowing for the integration of Simplebet’s proprietary machine-learning models into DraftKings’ (DKNG) best-in-class pricing and technology platform to create “highly accurate betting opportunities” during every moment of a game.

On Seeking Alpha, analyst Leo Nelissen said DraftKings (DKNG) offers investors diversified revenue streams and a steadily increasing market share, putting it in a great spot for future growth. “Although it doesn’t pay a dividend and isn’t profitable yet, its growth potential is hard to ignore,” he highlighted.