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Super Bowl to Generate $1.7 Billion in Legal Bets, Says Macquarie

This year's Super Bowl will generate $1.7 billion in legally placed wagers, with DraftKings (NASDAQ: DKNG) identified as the gaming stock with the greatest potential for downside or upside leverage regarding the event. 

This information comes from a recent report by analyst Chad Beynon of Macquarie. In the memo, Beynon stated that with 160 million American adults having access to regulated sports betting, Super Bowl LIX is expected to produce $1.7 billion in legal wagers, a rise of 11% compared to last year’s game. Macquarie estimates that around 11% of adults in the US will wager at least $100 on the NFL championship game.

"We think books will look to reduce their liability with most betting occurring closer to Sunday’s kickoff. If current trends stand, we estimate DKNG will have the highest exposure at +/-3.5% to current 1Q US cons revs based on various scenarios we analyze,” observes Beynon.

DraftKings and Flutter Entertainment’s (NYSE: FLUT) FanDuel are the top two online sportsbook operators in the United States. The pair and their competitors could benefit from some ease during the Super Bowl after enduring what was widely labeled as a “consumer-friendly” fourth quarter. 

Chiefs, Under Will Aid Sportsbooks 

As per Macquarie's estimates as of Tuesday night, the largest Super Bowl liabilities for bookmakers were on the total of 48.5 and the Philadelphia Eagles on the moneyline. In other words, it's probable that gaming companies prefer the Kansas City Chiefs to triumph in a game with few points scored. 

The same could apply to investors in DraftKings and Flutter, although it's undeniable those stocks have risen over 12% and 3.42%, respectively, in the last month. If the books achieve their intended outcome, it may lead to a hold rate of 22% or about $365 million in gross gaming revenue (GGR) and $255 million in net gaming revenue (NGR), as stated by Beynon. 

The analyst stated that if the Eagles triumph and the over is achieved, it might result in a hold rate of -4%. DraftKings' revenue for the first quarter might increase or decrease by 3.5% depending on Super Bowl exposure. 

According to Beynon, Flutter's risk profile is roughly half as much, whereas Rush Street Interactive (NYSE: RSI) stands at 1%. 

Additional Super Bowl Elements to Monitor 

The Super Bowl is the top single sporting event for betting in the US, making it significant for sportsbook operators’ first-quarter outcomes; regardless of whether the results are positive, the game presents an exceptional chance for attracting new customers.

"While material to 1Q earnings, the more important opportunity rests in customer acquisition through campaigns like FanDuel’s “Kick of Destiny 3,” said Beynon. “For data provider Genius Sports (NYSE: GENI), we see less risk given its payment model and upside from in-play betting momentum spurred by big events like the Super Bowl, with in-play expected to grow at a compound annual growth rate of 31% through 2030.”

Predictions show that the total bets for Super Bowl LIX will reach an all-time high, however, the average bet amount is expected to decrease this year.