This Sunday will see millions of American tune into the 56th Super Bowl. This is the climax of the American football season, with viewership figures previously topping 100 million.
That also means it is the biggest betting day of the year for US sports. Due to growth of legalisation of sports betting in the US, this year’s betting numbers will be bigger than ever.
Aaron Fischer, co-Founder of the Fischer Sports Betting & iGaming UCITS ETF (BETS) comments:
“The Superbowl is being played this Sunday (Feb 13) between the LA Rams and the Cincinnati Bengals. As usual, the Superbowl is the biggest betting day of the year for US Sports and this year will be no exception with significantly more states offering legal sports betting for the first time (25 states have legalized sports betting with 21 states currently taking wagers. Last year, 23.2 million people in the US wagered $4.3b on the game between the Chiefs and the Buccaneers. This was a 63% increase over the previous year.
With the huge increase in sports betting in the US, we recommend investors getting exposure to the Fischer Sports Betting and iGaming ETF known as BETS. The ETF was launched last year during the peak of industry valuations. Since Q1 in 2021, the sector has been down 57%. Our ETF was launched in the middle of 2021 and has been down around 25%. It is the perfect time to revisit the ETF with a more attractive valuation and upcoming positive catalysts in the form of very strong Superbowl Betting data.
Revenue data has been better than expected with analysts upgrading 2025 industry estimates by 75% from $12b in April 2020 to $21b in November 2021. They expect long term industry revenues of $30b based on expected legalization (across some states) or $67b on full legalization (across all states).
New Jersey data has been strong with sports betting spend per adult at $91 compared to $57 in the UK and $75 in Australia. iGaming is also higher in New Jersey at $171 per adult compared to $92 in the UK.
However, with more optimistic revenue data, companies are investing heavily to capture market share. In 2021, DraftkIngs is expected to lose $700m at the EBITDA level, Caesars $460m, Bet MGM $460m and Fanduel at $360m. Marketing spend is also expected to be greater in 2022 with Draftkings spending $1.2b vs $900m in 2021. Bet MGM aims to spend 25% more in 2022 with $500m in marketing v $400m in 2021.
However, we do see a path to profitability with Bet MGM expected to reach positive EBITDA towards the end of 2023.
M&A activity was strong over 2020-21 and we expect the same trend to continue in 2022 as larger B2C operators seek to capture more of the value chain through vertical integration. We see some of the “picks and shovels’ companies in Europe as being prime candidates.”