Super Bowl LV will be a bonanza for gambling companies

February 6, 2021

New York (CNN Business) – The Kansas City Chiefs or the Tampa Bay Buccaneers? We don’t know who will win Super Bowl LV. But the big sports betting and fantasy firms are already champions.

Shares in DraftKings are up nearly 35% this year ahead of Sunday’s big game in Tampa. The stock is up nearly 260% since it went public in April 2020 following a merger with a special purpose “blank check” acquisition company, or SPAC.

This is the third Super Bowl since the Supreme Court legalized sports betting at the state level in 2018. Since then, several states have passed measures that allow betting at physical locations (known as sportsbooks), as well as via gambling online. That means 2021 could be the best year yet for the gaming giants.

DraftKings is not the only company benefiting from the wave of legalized sports betting in the United States.

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Shares of UK-based Flutter Entertainment, which owns DraftKings rival FanDuel, rose roughly 75% last year. The owner of the Penn National Gaming casino, who bought a large stake on Barstool Sports last year, it’s skyrocketed around 280% since February 2020.

“The demand is off the charts,” said Matt King, CEO of FanDuel, in an interview with CNN Business on Thursday. “This will be the largest event in the history of the company.”

Football fans in more than two dozen states and Washington now have the ability to legally bet on sports online, through mobile apps, or in person at licensed sportsbooks.

“The most significant change is the growth of our available customers,” said Jason Robins, CEO of DraftKings.

For the 2019 Super Bowl, Robins notes, DraftKings was able to accept bets from users in only one state: New Jersey. Last year, the app was available in five states. Now, there are up to 12.

Meet the two players who dominate the business

DraftKings, along with FanDuel, is already a market leader. The two companies have emerged as Coca-Cola and Pepsi from the sports betting industry.

Both firms are allowing players to place traditional bets such as who will win the game and / or cover the point difference. (The Chiefs are favored by 3.)

But players can also make so-called “support” propositions or bets on the results, such as who will win the game’s Most Valuable Player (MVP) trophy – Robins said the Chiefs ‘Patrick Mahomes is the favorite over the Los Angeles’ Tom Brady. Buccaneers a close second – or which player will score the first touchdown.

DraftKings also hopes to leverage the Super Bowl spotlight to add even more customers. Robins told CNN Business that the company is running two 15-second commercials Sunday night: one just before halftime and one in the third quarter.

FanDuel’s King said he was not concerned with DraftKings being announced during the game and could increase his exposure to customers as a result.

King said it didn’t make sense for FanDuel to buy ad time this year. CBS is reportedly charging roughly $ 5.5 million for a 30-second ad. But he didn’t rule out running banner ads in future Super Bowls, noting that there are enough players to support several successful companies in the business.

“We are in the early stages of this industry. If you compare it to any other digital and disruptive industry, there will be a restructuring, ”King said. “But it is not going to be a winner that takes the whole market. There will be some important players.

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Casino companies are also looking to profit from sports betting

Barstool has the potential to be a third major player in online gaming as the company continues to expand to other states.

“We are happy with the first results, but we are in this great place where we believe we can generate significant market share and profitability simply by relying on (our) Barstool media association,” said Jay Snowden, CEO of Penn National Gaming, in the conference call on the company’s results Thursday morning.

Casino giant MGM, now backed by Barry Diller’s IAC, is also increasing its presence in online sports betting. And Bally’s recently announced that it would buy leading fantasy sports company Monkey Knife Fight.

Caesars Casino is also moving more aggressively in business, thanks to its planned acquisition of British sportsbook William Hill and a partnership with fantasy sports company SuperDraft.

“No one other than FanDuel and DraftKings has a significant market share right now,” said Caesars Co-President of Sports and Online Gaming Eric Hession. “But the reason we are making these investments is that, in the long term, we can create an attractive offering.”

Hession added that gaming companies like Caesars can leverage their existing player base in land-based casinos and leverage their branding and marketing prowess. Caesars is inviting some 250 of its most loyal customers to watch the Super Bowl at a socially estranged event at Allegiant Stadium, home of the NFL’s Las Vegas Raiders.

Several other companies in the world of fantasy sports and gaming are looking to take advantage of the hype around the Super Bowl, as well as other live sports.

A company called PrizePicks even allows fans to make mixed sports predictions – a customer could make a combined prediction about, for example, how many fantasy points Mahomes will count and how many points Bradley Beal of the Washington Wizards will score against the Charlotte Hornets on Sunday. .

So there is a lot of interest in gambling and contests for the many sports betting and fantasy sports companies to take advantage of.

“The Super Bowl is a very busy time for us,” said Adam Wexler, PrizePicks CEO. “It’s an active week for all the daily sports fantasy sites.”