Super Bowl Fever Grips Las Vegas Super Bowl Fever Grips Las Vegas

Written By Michael Gary Scott

Las Vegas Strip at night - high vantage

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The 2024 Super Bowl is shaping up to be a windfall for the Las Vegas Strip and sports betting operators. The confluence of legalized sports betting in new states and a high-profile game featuring the Kansas City Chiefs and San Francisco 49ers has analysts predicting legal wagers could surpass $1.35 billion across 39 regulated markets. Notably, legal Super Bowl bets will be made in Florida for the first time this year. Other states joining the betting fray include Massachusetts, Kentucky, Maine, Vermont, and Nebraska. Legal Sports Report projects that U.S. sports betting operators could rake in over $100 million on Super Bowl 58. The surge in prop bets, fueled in part by the involvement of pop star Taylor Swift and Kansas City Chiefs standout Travis Kelce, has significantly contributed to the record-breaking action at major sportsbooks.

The Super Bowl will take place in Las Vegas, casting an even brighter spotlight on the Strip. Hotel room rates in Las Vegas have skyrocketed since the Kansas City Chiefs and San Francisco 49ers secured their spots in the Super Bowl, continuing an upward trajectory that began in November. This rise in room rates persisted despite the opening of the high-profile Fontainebleau Las Vegas, which added new room supply. The Nevada Gaming Control Board recently reported an 11% year-over-year increase in gaming revenue on the Las Vegas Strip in December, reaching a record $905 million. Baccarat continues to be a significant profit center for the casinos. Additionally, the performance of the Las Vegas Locals market has been remarkably robust. Looking ahead, the convention calendar appears strong for the Las Vegas Strip, and all signs point to high-end consumers maintaining their robust spending in Vegas. The upcoming events, including NFL football, F1 Racing, and Sphere (SPHR) concerts, are expected to draw significant foot traffic to the region once again this year. The list of stocks that could potentially benefit from the increased attention on Las Vegas includes Red Rock Resorts (RRR), VICI Properties (VICI), Golden Entertainment (GDEN), Hilton Worldwide (HLT), and Bally’s Interactive (BALY).

On Wall Street, Morgan Stanley cautioned that near-term margins could face pressure from escalating promotions by existing and newer businesses (BetMGM, ESPN Bet, Fanatics (FANA)) looking to rejuvenate market share and narrow the competitive gap with established leaders. However, the results of 2023 indicate that making permanent inroads may be more challenging, as the leading market players have created a flywheel effect. This effect has allowed them to increase market share and win rates, providing the firepower to reinvest in product and promotion. Although some market share fluctuations are expected over the next 12-18 months, Morgan Stanley’s long-term view of the overall market share dynamics remains largely unchanged, with FanDuel (OTC:PDYPY) and DraftKings (NASDAQ:DKNG) being seen at the top, followed by BetMGM (NYSE:MGM), Caesars Sportsbook (CZR), and ESPN Bet (DIS). Looking at a broader perspective, Oppenheimer estimates that the U.S. legal online sports betting market will grow by another 25% in 2024 to $15.8 billion as more states regulate digital wagering.

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Watching downloads

The top sports betting apps by iOS downloads over the last ten weeks are, in order: FanDuel (FLUT), DraftKings (DKNG), Hard Rock, ESPN Bet, Betr, BetMGM (MGM), Bet365, Caesars (CZR), Fanatics (FANA), and PointsBet (OTCQX:PBTHF).

A new player

Flutter Entertainment (FLUT) recently commenced trading on the New York Stock Exchange and ceased trading on Euronext Dublin. A proposal to move the primary listing from the London Stock Exchange to the NYSE will be put to shareholders at the company’s next annual meeting. Some analysts believe that a primary listing in the U.S. could elevate the profile of the entire sports betting sector.

The catch-all

The Roundhill Sports Betting & iGaming ETF (NYSEARCA:BETZ) is one option for investing in the sports betting and iGaming sector broadly. Top holdings include Flutter Entertainment (FLUT), DraftKings (DKNG), Evolution AB (OTCPK:EVVTY), Entain Plc (OTCPK:GMVHF), Kindred Group (OTC:KNDGF), Churchill Downs (CHDN), and Sportradar (SRAD).

A potential sleeper

Cathie Wood’s ARK Invest has significantly increased its holdings in Genius Sports (GENI) over the past week, further bolstering its position in the ARK Next Generation Internet ETF (ARKW). Genius Sports received favorable coverage from Seeking Alpha analyst Stephen Tobin.