U.S. Sports Betting Boom Promises $5 Billion Profit Opportunity, Jefferies Says. Buy These Stocks

Callum Keown Feature Consumer CZR ERI GVC.LN MGM WMH.LN Stars Group Eldorado Resorts GVC FanDuel Ladbrokes MGM Resorts MGM Resorts Flutter Entertainment Flutter Entertainment Caesars Entertainment Caesars Entertainment ROAR Digital William Hill William Hill CBS Gambling Industries Leisure/Arts/Hospitality James Wheatcroft North America United States Northeast U.S. New Jersey Market Share Corporate/Industrial News Domestic/Foreign Markets CZR FLTR.DB FNDL.XX I/CNO M/LEAH MGM N/CNW N/DJN N/MSH N/WER R/NJ R/NME R/US R/USE TSG TSGI.T WMH.LN Barrons.com Barrons Blogs Wires CODES_REVIEWED Consumer Feature US author Callum Keown author|Callum Keown name Callum Keown extractedtext Callum Keown rank 1 codetype author code callum_keown nameformat surname_first author Callum Keown id Callum Keown topicid barrons_display_brand BARFEATURE barrons_display_brand|BARFEATURE codetype BARRONS_DISPLAY_BRAND canbedisplaybrand true value BARFEATURE source MANUAL status modified name Feature code BARFEATURE 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Hill ticker UK:WMH confidence 95 subcat com relevance 31 significance prominent name William Hill confidencerange high exchangeisocode XLON codetype co code wlhill onlinesignificance prominent co amygam co|amygam country US symbol TSGI.T displayname Stars Group why occur extractedtext Stars Group source FACTIVA seoname stars_group countrycode US relevancerange low chartingsymbol STOCK/US/XNAS/TSG fcode amygam fullextractedtext Stars Group ticker TSG confidence 91 subcat com relevance 14 significance passing name Stars Group confidencerange high exchange Nasdaq exchangeisocode XNAS codetype co code amygam onlinesignificance passing-mention co hubdub co|hubdub fullextractedtext FanDuel displayname FanDuel confidence 100 why occur extractedtext FanDuel source FACTIVA subcat com relevance 14 significance passing name FanDuel confidencerange high relevancerange low fcode hubdub codetype co code hubdub onlinesignificance passing-mention co mgmg co|mgmg country US symbol MGM displayname MGM Resorts International why occur extractedtext MGM Resorts source FACTIVA seoname mgm_resorts_international countrycode US relevancerange low chartingsymbol STOCK/US/XNYS/MGM fcode mgmg fullextractedtext MGM Resorts ticker MGM confidence 100 subcat com relevance 19 significance passing name MGM Resorts confidencerange high exchange NYSE exchangeisocode XNYS codetype co code mgmg onlinesignificance passing-mention co prmus co|prmus country US symbol CZR displayname Caesars Entertainment why occur extractedtext Caesars Entertainment source FACTIVA seoname caesars_entertainment countrycode US relevancerange low chartingsymbol STOCK/US/XNAS/CZR fcode prmus fullextractedtext Caesars Entertainment ticker CZR confidence 100 subcat com relevance 26 significance passing name Caesars Entertainment confidencerange high exchange Nasdaq exchangeisocode XNAS codetype co code prmus onlinesignificance passing-mention co ladb co|ladb fullextractedtext Ladbrokes displayname Ladbrokes confidence 100 extractedtext Ladbrokes source FACTIVA subcat com relevance 1 name Ladbrokes confidencerange high relevancerange verylow fcode ladb codetype co code ladb co wstge co|wstge fullextractedtext CBS country US symbol VIAC ticker CBS displayname CBS confidence 93 extractedtext CBS source FACTIVA subcat com relevance 1 seoname viacomcbs countrycode US name CBS confidencerange high exchange NYSE relevancerange verylow exchangeisocode XNAS chartingsymbol STOCK/US/XNAS/VIAC fcode wstge codetype co code wstge co ROAR Digital co|ROAR Digital fullextractedtext ROAR Digital displayname ROAR Digital name ROAR Digital extractedtext ROAR Digital source FACTIVA subcat com codetype co code roar_digital co PDDYL co|PDDYL country UK codetype co displayname Flutter Entertainment extractedtext Flutter Entertainment source MANUAL code uk_fltr name Flutter Entertainment significance prominent exchange U.K.: London exchangeisocode XLON chartingsymbol STOCK/UK/XLON/FLTR fcode PDDYL status modified onlinesignificance passing-mention co WLHILL co|WLHILL symbol WMH.LN country UK codetype co displayname William Hill extractedtext William Hill source MANUAL code uk_wmh name William Hill significance prominent exchange U.K.: London exchangeisocode XLON chartingsymbol STOCK/UK/XLON/WMH fcode WLHILL status modified onlinesignificance passing-mention co GAMVC co|GAMVC symbol GVC.LN country UK codetype co displayname GVC Holdings extractedtext GVC source MANUAL code uk_gvc name GVC significance prominent exchange U.K.: London exchangeisocode XLON chartingsymbol STOCK/UK/XLON/GVC fcode GAMVC status modified onlinesignificance passing-mention co EXCHLD co|EXCHLD symbol ERI country US codetype co displayname Eldorado Resorts extractedtext Eldorado Resorts source MANUAL code eri name Eldorado Resorts significance prominent exchange U.S.: Nasdaq exchangeisocode XNAS chartingsymbol STOCK/US/XNAS/ERI fcode EXCHLD status modified onlinesignificance passing-mention co PRMUS co|PRMUS symbol CZR country US codetype co displayname Caesars Entertainment extractedtext Caesars Entertainment source MANUAL code czr name Caesars Entertainment significance prominent exchange U.S.: Nasdaq exchangeisocode XNAS chartingsymbol STOCK/US/XNAS/CZR fcode PRMUS status modified onlinesignificance passing-mention co MGMG co|MGMG symbol MGM country US codetype co displayname MGM Resorts International extractedtext MGM Resorts source MANUAL code mgm name MGM Resorts significance prominent exchange U.S.: NYSE exchangeisocode XNYS chartingsymbol STOCK/US/XNYS/MGM fcode MGMG status modified onlinesignificance passing-mention company WMH.LN company|WMH.LN name William Hill significance PASSING-MENTION company GVC.LN company|GVC.LN name GVC significance PASSING-MENTION company ERI company|ERI name Eldorado Resorts significance PASSING-MENTION company CZR company|CZR name Caesars Entertainment significance PASSING-MENTION company MGM company|MGM name MGM Resorts significance PASSING-MENTION djn FLTR.DB 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Buy These Stocks U.S. Sports Betting Boom Brings $5 Billion Profit Opportunity, Jefferies Says. Buy These Stocks U.S. Sports Betting Boom Brings $5 Billion Profit Opportunity, Jefferies Says. Buy These Stocks

The booming U.S. sports betting market could be worth $5 billion in profits with three British betting stocks set to soar as a result, according to Jefferies.

U.S. Sports Betting Boom Promises $5 Billion Profit Opportunity, Jefferies Says. Buy These Stocks

The booming U.S. sports betting market could be worth $5 billion in profits with three British betting stocks set to soar as a result, according to Jefferies.

https://www.marketwatch.com/story/the-5-stocks-set-to-soar-from-the-us-sports-betting-boom-2019-07-19 https://www.marketwatch.com/story/firms-say-sports-betting-market-to-reach-8-billion-by-2025-2019-11-04 https://www.barrons.com/articles/flutter-stock-soars-as-stars-merger-will-create-worlds-largest-betting-firm-51570012678 https://www.wsj.com/articles/william-hill-cbs-strike-sports-betting-media-deal-11581368459 https://www.barrons.com/articles/william-hill-is-the-new-1-billion-game-in-town-for-u-s-sports-gamblers-51565281114?refsec=consumer U.S. Sports Betting Boom Brings $5 Billion Profit Opportunity, Jefferies Says. Buy These Stocks By Callum Keown Getty Images The Monmouth Park Sports Book in New Jersey on the first day of legal sports betting in the state, in June 2018. (DOMINICK REUTER/AFP/Getty Images)

The booming U.S. sports betting market could be worth $5 billion in profits by 2023 with three British betting stocks set to soar as a result, according to Jefferies.

The bank’s analysts raised its target price on U.K.-listed trio Flutter Entertainment, formerly Paddy Power Betfair, William Hill and Ladbrokes Coral owner GVC, which they said could double group profits in five years. The valuations assume Flutter has a 20% market share, with William Hill and GVC both having a 10% market share.

Jefferies predicted gross gaming yield of $19 billion from the U.S. market by 2023 - equivalent to a $5 billion Ebitda opportunity.

It comes as an increasing number of states legalize sports betting following a Supreme Court ruling in May 2018 striking down a ban on state-authorized gambling on football, basketball, baseball, and ice hockey.

Jefferies said 20 U.S. states have so far legalized sports betting, with 14 taking bets so far, which was “more quickly than we originally anticipated.”

The rapid growth in New Jersey, the first new state to legalize since the ruling, is another reason for the Jefferies upgrade. Since the first bet in June 2018, more than $5.8 billion worth of wagers have been placed in New Jersey.

“We upgrade our estimates for the U.S. sports betting markets and see a $5 billion Ebitda opportunity. Current valuations of Flutter, GVC and William Hill do not attribute any material value for the U.S., in our view, despite scope for the U.S. to double group profits in five years,” Jefferies analysts, led by James Wheatcroft said in a note.

Flutter, the market leader in New Jersey following its acquisition of FanDuel and Fox Bet, agreed to buy Canadian online gaming company The Stars Group last year to create the world’s largest online betting operator.

Jefferies said the company “stands out” in the sector was poised to replicate its New Jersey success in other states and raised its target price from 9,500p to 13,500p - a 57% upside from the current price.

William Hill, which struck a deal with CBS Sports earlier this week allowing it access to the media giant’s audience, is also well-positioned, according to Jefferies, which raised the stock’s target price from 210p to 400p, a 111% upside.

The company has also partnered with casino operator Eldorado Resorts, which has since taken over Caesars Entertainment.

“William Hill is well-placed in the U.S., with a demonstrable track record and extensive agreed market access (which could grow materially if/when Eldorado acquires Caesars),” Wheatcroft said in the note.

GVC, which has a 50/50 joint venture - ROAR Digital - with U.S. casino giant MGM Resorts, also gets a target price upgrade from 1,100p to 1,500p - a 63% upside. After a “slow start” ROAR had an 8% market share in New Jersey as of December and the company has targeted 15% by the end of March, Jefferies said.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.