In May of 2018, the Supreme Court officially lifted the federal ban on sports betting. The Professional and Amateur Sports Protection Act of 1992 had prohibited sports betting for over 25 years. Since 2018, 20 states have legalized sports betting in some capacity, although each state has different regulations. New York allows you to bet only on physical sportsbooks, while New Jersey allows full betting with mobile options. Montana allows “in-person online” betting, while New Hampshire only has one mobile betting option.
In addition to the 20 states that have already passed legislation, there are 6 more that will likely legalize sports betting in 2021. These states are either awaiting further action by the legislature, or have already been approved and are awaiting their first bet. There are another 14 states that have the possibility to legalize sports wagering in 2021 or 2022.
The sports betting market will likely see dramatic growth in the coming years as more states legalize the practice, essentially since sports are such an essential part of US culture. Companies in the sports betting industry could see huge financial gains as a result. In this article, we’ll discuss the best sports betting stocks to grow your portfolio.
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Best Sports Betting Stocks
Penn National Gaming, Inc. (NASDAQ:PENN)
Penn National Gaming is an American racetrack and events operator. Based in Pennsylvania, Penn operates 43 gambling facilities across the United States and Canada. Many of these establishments are part of their Hollywood Casino brand. Notably, Penn also has a 36% stake in Barstool Sports. In September of 2020, Barstool Sports launched their Barstool Sportsbook. This mobile sports betting application was first launched in Pennsylvania. The app handled $11 million in wagers in its first week of operation alone. By the end of 2021, Sportsbook expects to be legalized in 12 different states.
Penn has a market cap of $16.99 billion. In March of 2020, Penn traded for $7.89 per share. It now trades for over $100 per share. This explosive growth is likely to continue as more states legalize sports betting.
Roundhill Sports Betting & iGaming ETF (NYSEARCA:BETZ)
The Roundhill Sports Betting & iGaming ETF is a fund that follows the Roundhill Sports Betting & iGaming Index (“BETZ Index”). This index is the first of its kind, following the performance of the top companies in the sports betting and iGaming industry. The fund consists of 38 holdings across 4 thematic categories: sportsbooks (33.3%), technology (30.1%) casinos & other (19.4%), and online gaming (17.2%). Their top 3 holdings are William Hill PLC (WIMHF), PointsBet Holdings Pty Ltd (PBHF), and DraftKings (DKNG). These account for 9.51%, 8.42%, and 6.68% of the holdings, respectively. This fund has holdings across 14 different countries, including the US.
This fund has a relatively high expense ratio of 0.74%. The unique, one-of-a-kind nature of this ETF is likely the reason for this. This fund went public in June of 2020 and has since seen nothing but growth since it hit the market. The Roundhill Sports Betting & iGaming ETF now trades for $29.46 per share.
Flutter Entertainment plc (OTCMKTS:PDYPY)
Flutter Entertainment is a bookmaking holding company. Paddy Power and Betfair merged in 2016 to create Flutter Entertainment. This company trades on the London Stock Exchange, and it’s been on the market for much longer than any of the American sports betting stocks on our list. Headquartered in Ireland, Flutter has a diverse portfolio of sporting betting and sports gambling companies. Some of these include FanDuel, PokerStars, Betfair, Sky Bet, and more. With its well-established and geographically diversified portfolio, Flutter is one of the largest sports betting platforms in the world.
Since March of 2020, Flutter has seen massive growth on the market. Both the company and their investors have been very excited about the legalization of sports betting in the United States. Flutter currently trades for $98.56 per share, and there’s huge potential for growth as they expand further into the US market.
MGM Resorts International (NYSE:MGM)
MGM Resorts is a global hospitality and entertainment company with destination resorts in Las Vegas, Detroit, Maryland, New Jersey, and more. With this geographical diversification, MGM Resorts will benefit from the continued legalization of gambling across the United States. The company has a robust gambling infrastructure, so they’re prepared for both in-person and mobile betting operations.
MGM Resorts has a market cap of $15.5 billion. They currently trade for $31.39 per share. Unlike many of the other stocks on our list, MGM has struggled to recover from the COVID-19 pandemic. They took a huge hit in March 2020 when they had to close their resorts. However, there’s plenty of potential for their share price to improve as cities start to open up again.
Online Sports Betting Stocks
Churchill Downs, Inc.
Churchill Downs Incorporated owns the world-famous Churchill Downs track. This track is located in Louisville and hosts the world-famous Kentucky Derby. Often called one of the greatest sporting events in America, the Kentucky Derby has been held for 146 years. Each year, the event draws as many as 150,000 spectators. Churchill also owns 15 industry-leading racing properties and casinos. Since COVID-19 postponed the Kentucky Derby, the company has struggled a bit in lieu of event and venue restrictions.
However, Churchill Downs has recovered from the March stock crash. In fact, they are currently trading at their highest share price ever. The company currently trades for $214.36 per share. This growth is likely a result of the huge popularity of their online betting platform. Over the past year, the Churchill Downs online platform has become one of the most popular for horse racing bets.
Best Mobile Sports Betting Stocks
DraftKings is a daily fantasy sports contest and sports betting market operator. As a popular sports betting stock (and platform), Draftkings runs weekly fantasy sports-related contests. Players can win money based on the performance of individual players. DraftKings holds these contents for major American sports leagues including the NHL, NBA, MLB, and PGA, in addition to a number of other leagues. Additionally, 2020 led to some large professional deals for DraftKings. Michael Jordan joined their board of investors. They also made an agreement with the Detroit Pistons for fantasy sports, iGaming, and sports betting.
Draftkings was the first U.S. company to legally provide mobile and online sports betting in 2018. The platform has since expanded, and DraftKings now offers retail sports betting through partnerships with several casino companies. DraftKings launched their IPO in July of 2019. Shares of DraftKings originally traded for $9.80 per share. Since then, shares of DraftKings have grown to $52.52 per share. With a market cap of $20.58 billion, Draftkings will likely be an integral player in the sports betting market, as well as the mobile gambling industry in general.
Best Sports Betting Penny Stocks
William Hill plc (OTCMKTS: WIMHF)
William Hill is an international company that offers onling gaming, gambling, and sports betting. They are based in London and trade on the London Stock Exchange. Caesars Entertainment took over William Hill in September of 2020. Caesars Entertainment is a Nevada-based casino operator that is one of the largest gaming companies in the world. This acquisition helped Caesars grow their market share and will likely generate more revenue for William Hill, so it’s a win-win situation.
Like many of the other gaming companies, William Hill has made a full recovery from the COVID-19 market crash. This sports betting stock is a fantastic way for Caesars to expand into the gaming industry. We can expect their stock prices to rise in the future, but right now they’re trading for only $3.68 a share.
Should You Buy Sports Betting Stocks?
As sports betting becomes legal in the United States, it presents huge untapped potential for gaming companies. Investors who buy into this market now could see huge returns as sports betting becomes legal throughout the entire country.
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Sports Betting Stocks: Final Thoughts
Sports betting stocks are already starting to take off, so now is the perfect time for investors to add these stocks to their portfolios. It could take traditional casinos a long time to recover from the COVID-19 pandemic. Online sports betting is something that everyone can enjoy now despite social distancing regulations, and there’s huge potential for it to continue beyond the pandemic.