North Carolina's Sports Betting Market Favors DraftKings and Genius Sports
The sports betting industry and a few people in the financial sector are overjoyed as North Carolina's General Assembly approved mobile sports betting legislation this Wednesday. Governor Roy Cooper (D) is set to sign this bill into law, and it's anticipated that online sports betting will be functional in the state before the subsequent Super Bowl.
The list of possible victors involves the usual suspects, namely FanDuel and DraftKings (NASDAQ: DKNG). In a Wednesday briefing to clients, JMP Securities analyst Jordan Bender mentioned FanDuel and DraftKings as potential beneficiaries of legalization in the Tar Heel state.
The already existing daily fantasy sports (DFS) market in North Carolina puts FanDuel and DraftKings in a favorable position to promote the same audience from their DFS businesses into their sports betting app. "The two companies command approximately 75% of the sports betting revenue in the U.S.," mentioned the analyst.
FanDuel leads the U.S. online sportsbook market by market share. Flutter Entertainment (OTC: PDYPY) owns 95% of the company, while the other 5% is controlled by Boyd Gaming (NYSE: BYD).
Southern Shocks
To start 2023, it was guessed that state-level legislative action on sports betting could be slow, particularly boosted by the failed legislation in Georgia as well as Texas of late.
Unexpectedly, developments in the South started emerging, with Kentucky allowing sports betting, and North Carolina not far behind. Although legislators in North Carolina have been tinkering with the matter for some time, it's still a triumph for firms like DraftKings and FanDuel.
By population, North Carolina is the tenth-biggest state in the country. It is home to teams from three of the four largest North American sports leagues, with only Major League Baseball being absent. The state is also home to various FCS college football teams and Division I basketball teams, including Duke and University of North Carolina.
College basketball may well be the most beloved sport in the area. In light of that, the predicted January 2024 launch of mobile sports betting is momentous for the sector and the revenue generation efforts of the state.
As JMP's Bender notes, DraftKings and FanDuel could benefit from an edge in the state: no commercial casinos exist there. Additionally, Caesars Entertainment (NASDAQ: CZR) could be a winner in North Carolina sports wagering due to the management of two tribal casinos under the Harrah's brand in the region.
Ignore Genius Sports
Jordan Bender, an analyst at JMP Securities, also emphasized Genius Sports (NYSE: GENI) as a potential winner in North Carolina sports betting.
We highlighted Genius Sports as our top pick to possess in the sports betting space," added the analyst. "The extra revenue comes at no expense to the company, as its business model relies on the amount of wagering on sportsbooks."
An alternative perspective is that the more people wager, the more revenue Genius can earn from its sportsbook clients. [Editors' note: This story has been modified to correct a typo.]
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