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There has been some buzz in the last week over the potential for sports betting legislation in Texas to take another step forward. The excitement began when Dallas Mavericks owner Mark Cuban reportedly entered into a $3.5B agreement to sell a majority stake in the Dallas Mavericks NBA franchise to Miriam Adelson and her family. Adelson is one of the largest shareholders in casino giant Las Vegas Sands (LVS). The company disclosed in a filing during the week that the Adelsons were selling $2B worth of their shares to free up cash to buy a professional sports team.
While earlier this year the Texas legislature voted down bills that would have legalized online and casino gambling, there was more momentum than in prior attempts and the new development has raised hopes in the state that some Texas lawmakers will reconsider. A Las Vegas Sands (LVS) political action committee funded by Adelson gave more than $2M to political campaigns in the state in 2022, and hired 89 lobbyists. Following the Mavericks development, analysts have suggested Adelson would not have moved forward with a deal if there was not increased likelihood for new legislation to place sports betting and commercial casino gambling on the ballot. Another wildcard in the mix is that Houston Rockets owner Tillman Fertitta is also the owner of the Louisiana, New Jersey and Las Vegas locations of the Golden Nugget Casinos.
The case for legalizing sports betting in Texas appears to be solid. Thirty-seven states in the U.S. have launched legal betting markets in the past five years, including some close neighbors to Texas that are padding their tax coffers. Meanwhile, Eilers & Krejcik Gaming estimated that over $6.2B in illegal bets are placed every in the Lone Star state. For its part, the Texas Sports Betting Alliance has reminded that Texas is known for protecting and upholding individual liberty, which means letting individuals decide what is right for them through voter referendums.
Expectations for the total U.S. addressable market for sports betting were already being pushed higher before the Adelson-Dallas Mavericks news broke. Analysts have pointed to the acceleration of the betting handle in New York this fall, the sizzling start for Penn Entertainment’s (PENN) ESPN Bet, and positive commentary from DraftKings (NASDAQ:DKNG) at its recent investor day. Meanwhile, BetMGM (MGM) (OTCPK:GMVHF) will issue a business update next week that could also stoke TAM expectations.
In 2024, a U.S. listing for FanDuel (OTCPK:PDYPY) and potential IPO for Fanatics (FANA) are seen giving investors an easier way to invest in online sports betting pure plays. Data providers Sportradar (SRAD) and Genius Sports (GENI) have also been called out as companies that will benefit as the U.S. total addressable market for sports betting grows. Other companies scrapping for OSB market share in various regions include Caesars Interactive (CZR), Rush Street Interactive (RSI), and Bally’s Interactive (BALY).