DraftKings and ESPN Bet are gaining share in big states, while BetMGM and Caesars lag
In the two largest states offering mobile sports betting, Penn Entertainment's DraftKings (NASDAQ: DKNG ) and ESPN Bet (NASDAQ: PENN ) are gaining market share while rivals BetMGM and Caesars Sportsbook is vying for market share.
Morningstar analyst Dan Wasiolek noted in a recent report that average revenue for ESPN Bet in Michigan and Pennsylvania increased 7% and 7% respectively in February compared with the same period last year. 4%. Barstool sports betting brand. He added that ESPN Bet currently has high single-digit market share in both states, and some of that share appears to be at the expense of competitors.
Meanwhile, MGM's share fell between 3 and 5 points from the same period; Caesars was flat, down 3 points; smaller rivals were 3 to 3 points lower overall. ” Wasiolek observed.
Michigan and Pennsylvania are important states for any mobile sports betting. Since the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in 2018, only four states have surpassed Pennsylvania in sports betting processing and revenue. Michigan ranks 10th on this list, even though mobile sports betting has been legal in the state for just over three years.
DraftKings solidifies leadership in key states
DraftKings is vying with Flutter Entertainment's FanDuel (NYSE: FLUT) for the top spot in U.S. online sports betting market share, and in most states where both operators operate, they hold a commanding lead at No. 1 and second.
Citing first-mover and technology advantages, Wasiolek noted that DraftKings' share grew 7% in Pennsylvania and 11% in Michigan in February.
"Based on these state data, we have increased confidence in DraftKings' mid-term revenue opportunity and increase compound annual revenue growth (CAGR) from 23% to 24% in 2024-28, resulting in an increase in valuation to $47 per share from price Starting at $44,” the analyst wrote. "We believe investors should keep an eye on DraftKings stock to avoid falling below our valuation."
Analysts are less bullish on Caesars Entertainment Inc.'s (NASDAQ: CZR) digital unit, noting that it may struggle to achieve EBITDA due to lower stock sales in Michigan and the U.S. Profit (EBITDA) target. Arriving in Pennsylvania.
"As a result, we now expect Caesars' digital margins to average as low as 20% over the next decade compared to the mid-20s, increasing our fair value estimate from $75 to $73 per year," Wasiolek said.
ESPN Bet is cautiously optimistic
To its credit, Penn's ESPN Bet has performed well since launching last November, and its ability to take share from non-DraftKings/FanDuel competitors may alleviate investor concerns about the app's already entrenched presence among rivals. There have been concerns about the state's performance for several years.
Vasiolek sees some value in Penn stock, although he's wary of the regional casino giant's debt load.
"Additionally, Penn's $24 fair value estimate provides investors with an attractive entry point into an emerging player in the growing sports betting market, with the caveat that its higher leverage Weaning the balance sheet could keep stock prices volatile while financing costs remain high," concluded the analyst.
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Source: www.casino.org
