US Sports Betting Handle Doubles From Pre-Pandemic Levels, Says Canaccord Genuity

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Aided by more states joining the live and legal party, the US sports betting handle more than doubled from the levels seen prior to the coronavirus pandemic, according to Canaccord Genuity.

Today, there are 21 states and Washington DC where sports betting is legal. Recent launches in Michigan and Virginia, among others, are driving legalization momentum in the first half of 2021. That strength could continue in the back half of the year as more states enter the regulated sports wagering arena.

Six states representing an additional 13 percent of the US population have legalized online sports betting this year, but have not yet launched, with Arizona, Maryland, Louisiana, and Wyoming all hoping to launch in time for the start of football season,” write Canaccord analysts Michael Graham and Maria Ripps.”

The analysts add that Connecticut and New York signed off on mobile sports betting and are aiming to have it up and running in advance of the next Super Bowl. For operators, New York is a potential coup because it’s the fourth-largest state.

Ebullience Builds for iGaming

While sports wagering is permitted in more states and commands most of the headlines, internet casinos are on the rise, too. Currently allowed in just five states representing 11 percent of the population, iGaming revenue more than tripled from levels seen before the pandemic, say the Canaccord analysts.

That growth trajectory jibes with what some industry executives are saying about online casinos. While current legalization is limited relative to online sports betting, gaming insiders view internet casinos as a premier long-term growth driver for the industry. It is seen as one that will lead to superior margins and higher profitability than sports wagering.

“Total US iGaming revenue has steadily increased over the past year, and saw a notable uptick following the recent launch in Michigan, setting a new record of $309 million in March,” notes the Canaccord analysts.

Graham and Ripps forecast that Connecticut will be the sixth state to join the online casino roster, doing so at some point this year. They say FanDuel and DraftKings (NASDAQ:DKNG) have impressive market share in some states, while BetMGM holds dominant positioning in others.

Operator Outlook

Canaccord is bullish on operators including DraftKings and Score Media & Gaming (NASDAQ:SCR), the latter of which has a US footprint but is highly levered to single-game betting coming to life in its home country of Canada.

“Recent legalization progress increases our confidence that DraftKings’ current FY21 outlook is conservative, particularly given that guidance does not include any contribution from states the company does not currently operate in,” said the Canaccord analysts.

If Arizona, Maryland, Louisiana, and Wyoming come online before football season, there’s a runway for upward revisions on DraftKings, Graham, and Ripps note.

Canaccord has an $80 price target on the name, implying upside of more than 60 percent from current levels.

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