Sports betting stocks have been catching more interest in recent weeks ahead of the NFL season that kicks off this Friday. For anyone still wondering how to play the “sports are back, and so is betting” trade, Jefferies picked the top three names in this niche that it sees as the best bets for investors to cash in.
Why Jefferies likes DraftKings, Caesars, and MGM Resorts
DraftKings Inc (NASDAQ: DKNG), Caesars Entertainment, and MGM Resorts are the best-positioned stocks to benefit from the upcoming surge in sports betting, says Jefferies’ managing director David Katz.
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Katz’ thesis is based on the fact that these three companies are actively tapping into technology to make it more convenient for people to participate in sports betting. In his interview with CNBC’s “The Exchange”, he said:
“You need market access, brands, technology and content to succeed in this space. In our recent survey, 52% of the respondents picked ‘ease of use’ as a top priority; being able to get into the app, deposit funds, find the bets, and then withdraw the money. That was up 10% from the last time we did the survey.”
Why Jefferies doesn’t like Penn National Gaming
On the flip side, Katz named Penn National Gaming Inc, which acquired Barstool Sports last year, as the gaming stock that faces more headwinds.
“They have the market access through Penn, they have an audience through Barstool that’s extraordinary, but so far they’ve not shown the technology and the content to gain the kinds of market share numbers that they put out as their targets,” he added.
Sports betting is expected to boom even more this NFL season because several states, including Connecticut, Virginia, Arizona, and Tennessee, have recently legalised it. New York and Florida – two of the largest states in terms of betting – are also in the process of legalisation and are expected to join the league soon.
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