With the 2023 NFL season set for kick-off, keep an eye on sports gambling stocks. As DraftKings’ CEO Jason Robins recently noted, “It’s about to be the most important time of year seasonally for us. We have fall coming up with the NFL, the college football calendar and the NBA. This is when we acquire the most customers, when we have the biggest opportunity to gain more market share and when we generate the most revenue and the most EBITDA,” as quoted by EGR Global.
That being said, we’d have to be foolish to ignore the opportunity in sports gambling stocks. We also have to consider that Americans are spending billions of dollars on sports betting. In fact, since the United States Supreme Court cleared the way, Americans have bet more than $220 billion on sports. Plus, as of May, about two-thirds of states offer legal sports betting with more states likely to jump on the bandwagon, according to PBS.
That being said, investors may want to consider betting on these top three gambling stocks.
Gambling Stocks: DraftKings (DKNG)
After bottoming out around $11 in early 2023, DraftKings (NASDAQ:DKNG) rocketed to a high of $34. Since then, DKNG dipped to about $27.34, where weakness could quickly lead to an opportunity with the 2023 NFL season kicking off.
Analysts at Argus seem to like it here, too, raising their price target to $34 from $30 a share, with a strong buy rating. Analysts over at Truist also upgraded the DKNG stock to a buy rating, with a $44 price target. The path to profitability is becoming even clearer, as noted by Seeking Alpha.
Even better, the company just delivered a beat and raise quarter. Revenue soared 88% in Q2 to $875 million. All of this is thanks to healthy customer retention, engagement, new customers and product innovation. Q2 EPS of 14 cents beat estimates by 28 cents. Monthly unique payers (MUPs) jumped 44% year over year to 2.1 million.
Plus, DKNG raised its fiscal year 2023 revenue guidance to a new range of $3.46 billion to $3.54 billion from an earlier forecast of $3.135 billion to $3.235 billion. The new guidance now represents growth of 54% to 58%.
Genius Sports (GENI)
Another hot sports betting stock to consider is Genius Sports (NYSE:GENI), a $1.4 billion company with solid catalysts ahead. For one, it just extended a deal with the NFL. With that, the company will continue to be the exclusive distributor of data from the league, which will last through the 2027-28 season. The company also provides software services for sports betting and media companies and is also involved with NASCAR and the NCAA.
Helping, JMP Securities recently noted, “We are now recommending shares of GENI as our top pick in our coverage universe. The online sports betting ecosystem is vast, and companies are fighting for their piece of the pie. The company operates in the most attractive part of a complex ecosystem by owning long-term data rights necessary for any betting operator to price bets, while only competing against one major company globally.”
Even recent earnings have been solid. Group revenue was up 22% year over year to $86.8 million. Its group net loss from operations narrowed from $39.7 million in Q2 2022 to $7.8 million this year. Group adjusted EBITDA was $15.7 million, as compared to guidance for $14 million. Better, GENI expects to see group revenue of about $410 million, and group adjusted EBITDA of about $52 million this year, as well.
According to its earnings release, “The Company also expects to reach an important inflection point as it begins generating sustainable free-cash-flow in the second half of 2023 and beyond.”
Roundhill Sports Betting and iGaming ETF (BETZ)
Or, if you want to diversify with some of the top gambling stocks at low cost, take a look at the Roundhill Sports Betting and iGaming ETF (NYSEARCA:BETZ).
With an expense ratio of 0.75%, the ETF tracks gaming stocks, such as Entain PLC (OTCMKTS:GMVHY), DraftKings, Penn Entertainment (NASDAQ:PENN), Flutter Entertainment (OTCMKTS:PDYPY), and MGM Resorts (NYSE:MGM) to name a few. Since bottoming out around $14 earlier this year, the ETF pushed to a high of $18.88. While it’s been exhibiting some recent weakness, we’d use that as an opportunity ahead of the NFL season.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
