Sports betting companies are set to score big at this weekend’s Super Bowl, with DraftKings and FanDuel leading the rush, Bank of America said in a Friday note.
Sunday’s game will see the Kansas City Chiefs play against the San Francisco 49ers, paving the way for blowout betting activity. According to the note, an anticipated $1.5 billion will be waged, marking a 35% gain from last year’s record amount.
DraftKings and FanDuel stand to benefit the most from this weekend of big betting, BofA equity strategists led by Shaun Kelley wrote. The two firms make up the largest slice of the sports betting industry, together accounting for about 70% of the market in the third quarter of 2023.
“The sportsbooks may be cheering on the 49ers given 71% of the money is on the Chiefs but we think increased same game parlay offerings and prop bets will help support win rates,” Kelley said.
Sports betting industry players are also positioned to benefit from the expected attendance of Taylor Swift, whose presence may kick betting activity into a higher gear, BofA wrote.
The pop star’s summer tour has already highlighted how her appearance can be a substantial financial tailwind to numerous industries. For instance, revenue per available hotel room jumped 31% on average in cities she toured through.
“Sports books are leaning in and offering Taylor Swift themed prop bets, mostly related to Travis Kelce’s performance,” Kelley said, referring to the Kansas City Chiefs player dating Swift.
Some examples of these proposition bets — wagers not tied to the game’s outcome — include DraftKings’ “how you get the girl,” where Kelce scores a touchdown in each half. Meanwhile, FanDuel is offering a bet that Kelce could propose on the field.
As of Friday afternoon, DraftKings’ stock price stood at $43.67. The rapidly expanding popularity of sports betting in 2023 helped the firm jump 185% over the last 12 months. While FanDuel isn’t publicly traded, its parent firm Flutter became an NYSE-listed company in late January, and its shares have risen over 35% in the last 12 months.
Commercialized sports betting has ballooned into a $10 billion sector after a Supreme Court decision legalized it in 2018. According to Goldman Sachs, it’s only in the middle-innings of its expansion, with only half of US states having approved mobile sports betting.
“We expect growth to be driven by a combination of new state openings and a higher share of the consumer wallet being spent on sports betting over time,” Head of Leisure and Travel Research Ben Andrews wrote in a Wednesday note.
He estimates that American spending on wagers will eventually reach $45 billion per year.
The industry’s success has also gained it an endorsement from famed short-seller Jim Chanos, who closed his short position on DraftKings in July 2022, after he witnessed a jump in “bad-odd bets,” that don’t wager on clear outcomes.
“The thing that we underestimated — that I think is going to be a benefit for all these companies for a while anyway — is what bad bettors the US gamblers are,” he said in December.
