Tremendous Bowl May Have Brief-Time period Affect On DraftKings Inventory
Tremendous Bowl LVII kicks off in Glendale, Arizona, on Sunday. It’s anticipated to be essentially the most wagered-on version of the massive sport in historical past. As such, some analysts are analyzing DraftKings’ (NASDAQ: DKNG) inventory forward of the championship conflict.
DraftKings signage at a baseball stadium. The Tremendous Bowl might have an effect on the corporate’s share worth. (Picture: Forbes)
That’s smart as a result of DraftKings is one among a small variety of pure-play iGaming and sports activities wagering equities in the marketplace at present. In a Friday report back to purchasers, Macquarie analyst Chad Beynon notes that, relying on the sport’s consequence, DraftKings inventory and a few equivalents might get a lift.
Primarily based on current industrial volumes, we estimate $1.0-1.5bn will probably be wagered on this 12 months’s Tremendous Bowl legally (~50%+ development YoY) pushed by a mix of legalization (~20% development) and from continued mainstream adoption (~30% development) as a consequence of higher product choices (e.g., SGP, props) and higher consumer experiences (e.g., tech developments),” wrote the analyst.
Beynon notes that whereas the Tremendous Bowl gained’t be considerably completely different from a regular-season NFL sport, single-game volatility could be “materials” to sportsbook operators’ month-to-month and quarter gross gaming income (GGR) outcomes.
Potential Affect of Tremendous Bowl Volatility
As issues stand at this writing, the Philadelphia Eagles are -1.5 favorites over the Kansas Metropolis Chiefs, and the over/below is 51 factors. Some 70% of public bettors are on the Eagles, and 57% are on the over, in response to Macquarie knowledge.
Translation: Assuming no vital adjustments in betting patterns over the subsequent two days, sportsbook operators are cheering for a low-scoring affair gained by the Chiefs.
“We view low-scoring video games as incrementally helpful to sportsbooks, given the proliferation of single-game parlays (SGPs), as public bettors favor SGP bets with high-scoring outcomes,” added Beynon.
In analyzing DraftKings inventory as a Tremendous Bowl play, Macquarie runs bull, bear, and common situations for the operator. These embody DraftKings commanding anyplace from 20% to 30% of Tremendous Bowl deal with with maintain estimates starting from -5% to twenty%.
To put the upside/draw back situations into context, and assuming a 25% deal with market share for DKNG, we estimate a constructive consequence (bull case) might add as much as 10% upside to present 1Q23 consensus whereas the bear state of affairs has 5% draw back,” in response to the analyst.
Whereas sports activities wagering equities have a historical past, albeit temporary, of rising after the Tremendous Bowl, some analysts are bearish on DraftKings, cautioning buyers that the operator’s 2023 profitability narrative will face headwinds.
Tremendous Bowl Necessary, however Not Make or Break
Whereas there’s at all times hype ascribed to sports activities betting equities vis a vis the Tremendous Bowl, analysts and savvy buyers largely view it as simply one other occasion on the calendar.
“That mentioned, most operators are extra involved with profiting from buyer acquisition and engagement alternatives main as much as the Tremendous Bowl,” concluded Beynon.
That’s to say, if DraftKings can purchase a slew of recent prospects on an economical foundation because of the Tremendous Bowl, it might pay long-term dividends for the operator’s efforts to show worthwhile.
