Sports betting 2025: Organic growth, profit pursuit, and eyes on Texas

The sports betting market is projected to experience significant growth by 2025. Industry experts predict the U.S. sports betting market will reach approximately $7 billion in total revenue by 2025.

Missouri is the only state that will be adding legalized sports betting in the year ahead, meaning much of the growth will be organic. If the Show-Me state follows a timeline similar to Kansas, sports betting could be operational by March 2025, just in time for March Madness.

Looking ahead, J.P. Morgan said it sees meaningful growth and continued upside to total addressable market estimates in 2025 as the industry benefits from higher engagement rates, customer retention, and monetization from improved and expanded product offerings. Crucially, the firm does not think higher tax rates will be a key investor topic since Illinois sent shockwaves with its proposed tax hike on operators. Customer acquisition costs are also seen levelling off to help boost profitability.

The big two

DraftKings (NASDAQ:DKNG) and FanDuel (NYSE:FLUT) are still considered the two giants of the online sports betting sector due to their competitive strengths with product capabilities, customer acquisition competencies, and scale. JPMorgan is just one firm that has DraftKings (DKNG) tagged as a top pick, while Flutter Entertainment (FLUT) has the best consensus rating from Seeking Alpha analysts covering sports betting stocks.

As for the rest, recent survey data has indicated that BetMGM (MGM) may be on the rise and separating itself from a long list of contenders that includes Bet365, ESPN Bet (PENN), BetRivers (RSI), Hard Rock Bet, Bally Bet Sportsbook (BALY), Caesars Sportsbook (CZR), Fanatics Sportbook (FANA), Tipico, and PointsBet (OTCQX:PBTHF).

The Texas wildcard

Of the 11 states that do not have legalized sports betting, Texas could see the most dramatic developments in 2025. The Texas Sports Betting Alliance, a group of professional sports teams and betting operators, continues to lobby for legalization. Recent polls show strong public support in the Lone Star state, with over 75% of Texans backing a constitutional amendment to legalize sports betting.

Supporters of legalized sports betting include Dallas Cowboys owner Jerry Jones, former Dallas Mavericks owner Mark Cuban, Orlando Sanchez, Houston Texans owner Cal McNair, Houston Rockets owner Tilman Fertitta, the Texas Rangers, Dallas Stars, and San Antonio Spurs. On the political front, former Harris County Treasurer and Houston City Council Member, stated publicly that legalizing online sports gambling would benefit Texas through additional tax revenue.

Another interesting angle is how Las Vegas Sands (LVS) could fit into the mix. President Patrick Dumont has emphasized the casino company’s long-term commitment to Texas, calling it a great investment opportunity. Miriam Adelson, a top shareholder of Las Vegas Sands (LVS) and now the Dallas Mavericks, strongly supports legalizing gambling in Texas, including sports betting.

The Texas Legislature will be in session in January for a 140-day period that could settle the issue if there is momentum for sports betting legislation.