Sports Betting & Esports: What's Next and How to Invest

Sports Betting & Esports: What’s Next and How to Invest


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Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains dives into the latest news from the world of legalized sports gambling and esports. The episode also breaks down the companies, industries, and stocks that stand to benefit from the expansion of these two growing markets.

New reports show that New Jersey overtook Las Vegas as the U.S. sports betting capital—well at least for the month of May. The rise of mobile betting from the likes of DraftKings and others has helped the Garden State’s nascent sports gambling market take off. And it’s not just New Jersey that is ready to profit from legal sports betting.

In fact, 15 states and Washington D.C. now have legalized sports betting or passed legislation to introduce it soon. All of this has happened in roughly a year since the U.S. Supreme Court in May 2018 struck down the Professional and Amateur Sports Protection Act.

The four major North American professional sports leagues all have gambling partnerships with either MGM Resorts MGM or Caesars Entertainment CZR. Meanwhile, the likes of Paddy Power BetFair PDYPY, William Hill WIMHY, Madison Square Garden MSG, Penn National Gaming PENN, Churchill Downs CHDN, Boyd Gaming BYD, and others all stand to benefit from the continued expansion of the sports betting market. On top of that, Disney’s DIS ESPN and other media companies have rolled out betting-focused entertainment.

Along with the booming potential of the legalized sports gambling market, is professional video gaming. A few weeks ago, we talked about how Google GOOGL and Microsoft MSFT plan to square off in the cloud gaming market. Now, Simon Property Group SPG, which is the largest American mall owner, has bet on the rising popularity of esports as malls suffer in the Amazon AMZN age.

Overall, global esports revenues are projected to reach an $1.1 billion in 2019, up 27% from 2018, according to NewZoo. Esports have become very popular in South Korea, China, Europe, and the U.S. The industry also has the potential to overtake the NFL in terms of viewership within the next few years, as it fights to become the next global sports. At the moment, more people reportedly prefer watching video games over Netflix NFLX, HBO, ESPN, and Hulu combined.

Clearly, some of the gaming giants, such as Electronic Arts EA, Activision Blizzard Inc ATVI, and Take-Two Interactive TTWO stand to benefit from the growth of esports. But so do chipmakers like Nvidia NVDA and major sponsors such as Coca-Cola KO.

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