U.S. sports betting revenue hits a record, the market is bullish on this project

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Bookmaker
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U.S. sports betting revenue hits a record, the market is bullish on this project

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U.S. sports betting volumes have more than doubled from pre-coronavirus pandemic levels, helped by more states joining live broadcasts and legal parties, according to Canaccord Genuity.

In the U.S. to this day, sports betting is legal in 21 states and Washington, D.C. Recent launches in places like Michigan and Virginia are driving legalization momentum in the first half of 2021. The momentum is likely to continue in the second half of the year as more states move into regulated sports betting.

Made for iGaming

While sports betting is allowed in more states and grabs most of the headlines, internet casinos are also on the rise. Analysts at Canaccord said iGaming revenue in just five states, which currently only allow 11% of the population, has more than tripled from pre-pandemic levels.

This growth trajectory matches how some industry executives feel about online casinos. While current legalization is limited relative to online sports betting, gaming industry insiders see internet casinos as a major long-term growth driver for the industry. It is seen as leading to higher profit margins and higher profitability than sports betting. "Total iGaming revenue in the U.S. has grown steadily over the past year and has seen significant growth following its recent Michigan launch, hitting a new record of $309 million in March," Canaccord analysts noted.

Graham and Ripps predict that Connecticut will become the sixth state to join the list of online casinos, and will do so sometime this year. They say FanDuel and DraftKings have impressive market shares in some states, while BetMGM dominates others.

Operator Outlook

Canaccord is bullish on operators including DraftKings and Score Media & Gaming, which have operations in the U.S. but are highly reliant on single games in their home country of Canada. "The recent legalization progress reinforces our confidence that DraftKings' current outlook for FY21 is conservative, especially given that guidance does not include any contributions from states where the company does not currently operate," Canaccord analysts said.

If Arizona, Maryland, Louisiana and Wyoming go live before football season, then DraftKings, Graham and Ripps could earn upward revisions. Canaccord has an $80 price target on this, which implies more than 60% upside from current levels.
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