DraftKings, FanDuel Distancing Themselves From The Competition In Online Sports Betting

Online gaming stocks have taken a big hit in recent months, but Bank of America analyst Shaun Kelley said Monday that U.S. digital gross gaming revenue (GGR) was up 58% in the month of February.

Kelley said February online sports betting (OSB) GGR came in at an annual run rate of $211 million, down 32% month-over-month but up 39% from a year ago on a same-state basis. U.S. iGaming GGR for the month was $384 million, down 4% from January's record level.

The Numbers: Kelley said February sports betting numbers are typically low because of the lull between the Super Bowl and March Madness.

"This month’s hold of 4.9% in OSB (pressuring GGR) was the 2nd lowest since the start of 2020, only ahead of 4.1% in Sept. ’20 & slightly behind 5.3% in Feb. ’21," Kelley said.

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Kelley said the top six iOS sports betting and iGaming apps were downloaded 1.4 million times in February, down 28% from January but up 43% compared to a year ago.

Major Markets: At this point, the lion’s share of the OSB and iGaming market share is concentrated in just a handful of top names. In fact, in the top five OSB states (New Jersey, Pennsylvania, New York, Indiana and Michigan), the top five companies generate about 89% of the total GGR, Kelley said.

Draftkings Inc DKNG was the market share leader in OSB in the top five states in February, accounting for 30% of total GGR. DraftKings' gained an 8% GGR market share in the month.

Flutter Entmt ADR PDYPY subsidiary FanDuel was a close second in those five markets with a 28% OSB market share. DraftKings and FanDuel accounted for a combined 60% of February's total digital gaming handle, excluding New Jersey.

MGM Resorts International MGM had the third-highest OSB market share at 13%, up 1% compared to January.

Caesars Entertainment Inc CZR's OSB market share dropped 8% in February to 13% after the company significantly reduced its national media advertising budget.

Penn National Gaming, Inc PENN subsidiary Barstool’s OSB share increased by 2% to 5% of the total.

Benzinga’s Take: DraftKings and FanDuel are the two clear national market share leaders in OSB handle, while MGM is the leader in national iGaming share at 28%. In the past three months, Flutter shares are down 17.5%, DraftKings stock is down 32.8% and MGM shares are down 2.2%.