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Analyst: Penn National, Caesars Entertainment Could Benefit Most From Sports Betting

Analyst: Penn National, Caesars Entertainment Could Benefit Most From Sports Betting
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The recent Supreme Court ruling legalizing sports gambling nationwide has certainly created some profitable opportunities, but traders may not know where to place their bets.

U.S. sports betting will see massive growth over the next five years, and a handful of stocks are positioned to benefit, Height Capital Markets analyst Stefanie Miller said in a Monday note. 

Big Numbers

Height projects that U.S. sports betting will generate a relatively modest $160 million in gross gaming revenue in 2018, but Miller forecast for the number to climb to $950 million in 2019, including about $700 million in revenue from new sports betting operations in 16 additional states.

“Factoring out some of the initial hurdles we project will hamper growth over the first two years of legalization — limited mobile wagering regimes, slow adoption rates and initial high taxation rates — we think in five years sports betting gross gaming revenue can total upwards of $5 billion, or roughly 6.5 percent of projected annual non-sports GGR in the U.S.,” Miller said.

How To Play It

Seven states have already legalized sports gambling, and Height projects the total number will climb to around 17 states in 2019.

Miller broke down the companies with the most combined operational casinos in the 16 states excluding Nevada where Height expects state-sanctioned sports gambling. Of the publicly traded companies, the following four names have the most casino exposure in the key markets: 

  • Penn National Gaming, Inc. (NASDAQ: PENN): 17 casinos
  • Caesars Entertainment Corporation (NASDAQ: CZR): 15 casinos.
  • Pinnacle Entertainment Inc (NASDAQ: PNK): 11 casinos
  • Eldorado Resorts Inc (NASDAQ: ERI): 10 casinos

Americans Love Sports Betting

Nevada’s recent numbers suggest Americans are getting excited about sports betting. Nevada has reported that the five-year average growth rate for sports gambling revenue is about 8.2 percent, well above the 1.1-percent growth rate of non-sports gambling.

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Latest Ratings for PENN

Jul 2018Bank of AmericaMaintainsNeutralNeutral
Jun 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
May 2018NomuraMaintainsNeutralNeutral

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Posted-In: Height Capital Markets Stefanie MillerAnalyst Color Sports Analyst Ratings Trading Ideas General Best of Benzinga


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