The American Gaming Association (AGA) has projected that American adults will place $35bn in bets with legal sportsbooks throughout the 2024 NFL season.
This marks the AGA’s first ever legal wagering projection for the NFL season, which kicks off on 8 September, highlighting the continued growth and maturity of the US sports betting industry.
The projected $35bn in legal wagers for the 2024 season represents a significant increase from the $26.7bn estimated to have been wagered legally during the 2023 NFL season.
This growth is fuelled by the continued expansion of legal sports betting across the country, with states such as Maine, North Carolina, and Vermont launching new markets since last year’s NFL kickoff.
Smallest influx of new bettors
However, the upcoming football season sees a decrease in the percentage of the US population experiencing their first season of online sports betting.
According to analysts at JMP Securities, only 5% of the US population, primarily from Kentucky, Maine, Vermont, and North Carolina, will be new to online sports betting this season.
This marks the smallest influx of new bettors in recent years, down from 7% in 2023, 8% in 2022, and 9% in 2021.
JMP analysts expect the industry’s focus to shift towards deepening investments in existing states to reactivate players and attract new ones, particularly as customer acquisition costs become more attractive.
The firm projects a 27% year-on-year growth in gaming revenue for the second half of 2024, a slight decrease from the 34% growth seen in the same period last year.
Moreover, the analysts stressed that online sports betting legalisation has shown signs of slowing, with only Missouri and Nebraska having any momentum towards legalising online sports betting before the next football season.
Strong handle growth
Despite the slower progress in legislation this year, betting app downloads were up 28% year-on-year at the start of the college football season.
According to JMP, year-to-date handle growth has also been impressive, up 34% in July, 33% in Q2 2024, and 24% in Q1 2024.
Notably, same-store handle for major operators like DraftKings, FanDuel, ESPN Bet, and BetMGM has increased by over 20% in recent months.
Analysts project that accelerating handle growth could push total wagers to a record $33bn through the Super Bowl, approaching but just under the $35bn estimate provided by the AGA.
According to JMP, football-only parlays are expected to account for $10bn, or 30% of the total handle.
“Therefore, as football wagers reach an all-time high level, positive sport outcomes for betting companies will result in ‘higher highs’ for gaming margins and upward estimate revisions in the coming months, in our view,” the analysts said.
Focus on mid-tier operators
JMP analysts also expect that competition this season will primarily come from mid-tier operators like BetMGM, ESPN Bet, and Caesars, rather than from smaller, niche players.
“That is not to say the PrizePicks’ of the world will not continue to see success in niche verticals by building databases and revenue outside traditional sports betting and iGaming,” the firm wrote.
While top-tier companies like FanDuel and DraftKings are expected to continue to dominate the market, mid-tier operators are poised to challenge for market share.
Anticipated stock performance
Additionally, JMP noted there is growing interest in the seasonal trading patterns of online gambling companies, which have shown significant volatility around the NFL season.
With a broad pullback in valuations since March, analysts see potential for upside as the sector continues to evolve.
The analyst said that they see Flutter “as the stock to own through the football season.”
“We believe investors can benefit from FanDuel, the largest brand in the US ($30bn equity value), while hedging any regulatory impacts with its operations outside the US, generating $2bn of EBITDA and increasing at a high-single-digit rate.
“The balance sheet will be in an ideal position to invest in its existing markets and find new opportunities through M&A, in our opinion,” JMP said.
Genius Sports remains JMP’s favourite to own in the B2B online space.
“The GENI product is a must have in online gaming, and we view its ability to monetise sports rights as a key driver of our 17% revenue CAGR through 2026E.
“The investment in the upcoming football season, with its rights secured through 2028, will support strong earnings growth, in our view.”
Meanwhile, the firm upgraded Sportradar Group to Market Outperform due to recent progress in cost structure and capital allocation, which positions the firm for considerable growth in 2025 and 2026, with a 40% upside potential.