We recently published a list of 10 Best Sports Betting Stocks to Buy Now. In this article, we are going to take a look at where Caesars Entertainment, Inc. (NASDAQ:CZR) stands against the other sports betting stocks.
A U.S. Supreme Court decision in 2018 set off a sports betting boom that legalized wagering in 38 states and the District of Columbia. North Carolina legalized sports betting on March 11, and within the first 12 hours of the law’s implementation, the state wagered a remarkable $23.9 million. Of these, 30 states allow online sports betting, so if you’re within state lines, the thrill is only a click away. While most states have a minimum age of 21, a handful allow 18 or older.
Consumers can now bet from anywhere as long as they are physically present in the state due to the growth of online platforms. As a result, Americans legally wagered a record $119.84 billion on sports in 2023, up 27.5% from 2022, per the American Gaming Association’s Commercial Gaming Revenue Tracker, ushering in a new era for sports gambling in the US. Consequently, the sports betting industry’s revenue grew to $10.92 billion, a 44.5% YoY increase from 2022. The expansion was predominantly driven by continuing maturation in most existing markets as well as some new ones, including Massachusetts and Ohio. The trend is expected to continue, and in the second quarter of 2024, American sports wagerers wagered $31.75 billion. Revenue from it was $3.16 billion for the quarter, increasing 35.3% from the previous year.
While the United States is at the top of the Biggest Gambling Countries in the World, there are still 12 states in the US that do not allow legal sports betting, including California, Texas, Idaho, Utah, Minnesota, Missouri, Alabama, Georgia, South Carolina, Oklahoma, Alaska, and Hawaii.
Nonetheless, sports betting is one of the fastest-growing industries in the world. Jane Bokunewicz, director of the Lloyd Levenson Institute at New Jersey’s Stockton University, which studies the gambling industry, points out that legal sports betting could be appealing to people with limited discretionary budgets since it offers a new and inexpensive form of entertainment.
Goldman Sachs Research also states that the U.S. sports betting market is expected to grow significantly and, once it reaches maturity, could reach $45 billion each year. This growth will be prompted by new state openings and a growing share of consumer spending on sports betting, per Ben Andrews, head of leisure and travel research at Goldman Sachs in Europe, where legal sports betting has a longer history.
When it comes to consumer spending on sports betting, gambling interest reflects a sport’s popularity, with NFL football dominating in the United States. In 2023, over 73 million Americans said they planned to bet on the NFL season, which is almost 60% more than the previous season, according to a survey conducted by the American Gaming Association.
Globally, nearly one-third of people worldwide engage in sports betting at some point in their lives, based on the TGM 2022 Global Gambling and Sports Betting Survey. In 2021, 17% of people bet on sports with friends (mainly on football and horse racing), while 35.44% bet on sports, and 20.2% bet online/through applications.
According to Deloitte’s 2024 Sports Industry Outlook, generative AI is projected to dramatically impact sports betting in the next 12-18 months. The way sports fans interact with sports betting will probably undergo a revolution because of innovations in domains like personalized betting experiences, odds calculation, real-time data analysis, and improved prediction models.
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A general view of a luxury resort casino, surrounded by a beautiful landscape and illuminated at night.
Number of Hedge Fund Holders: 54
Although Caesars Entertainment, Inc. (NASDAQ:CZR) is best known for its Caesars Palace casino in Las Vegas, it currently runs more than 50 casinos around the country following its acquisition by Eldorado, which adopted Caesars name. Following that, the company bought William Hill, a British gambling company pushing it into the US online sportsbook industry. It changed the name of William Hill’s operations to Caesars Sportsbook.
The company has been using nationwide advertising to promote its online sportsbook aggressively, which has helped it capture a double-digit market share. However, it also resulted in large losses for the company, especially after facing big setbacks from the pandemic, leading management to adopt a more tactical and focused approach to future ad campaigns as additional states legalize sports betting.
The digital division of Caesars Entertainment, which offers sports betting, experienced a positive adjusted EBITDA of $5 million in Q1 2024 and an 18.5% year-over-year gain in revenue to $282 million, turning around a previous loss.
CZR now provides sports betting in 32 North American jurisdictions, 26 of which allow wagering on mobile devices.
In Q2 2024 earnings Eric Hession President, Caesars Sports and Online Gaming stated:
“Net revenues in our sports betting segment increased 19% year-over-year, driven by flat handle and hold of 7.2% which improved 80 basis points versus last year. Our product on the sports side continues to improve and our customers are reacting positively to our increasing mix of parlay and in-game offerings. We continue to drive growth in our parlay wagers with the percentage of that type of wager growing 380 basis points year-over-year, consistent with the trends we’ve observed throughout the year.
In July, we closed on the acquisition of ZeroFlucs a leading sports betting technology company based in Australia. ZeroFlucs team has already started contributing to the product innovation and driving hold improvements and customer engagement. In our eye gaming segment net revenues grew 50% for the second consecutive quarter driven by a 33% increase in volume and a 30 basis point year-over-year improvement in hold. Caesars Palace Online continues to grow as a percentage of our total iCasino revenues. We’re actively enhancing the product offerings by adding new and exciting game content including exclusively designed Caesars Themed Games.
We successfully completed the acquisition of WynnBet’s operations in Michigan in June, which sets the stage for the introduction of our new iGaming app, which will be branded the Horseshoe in early Q3. As we head to the back half of the year, we continue to be optimistic about the progress we’re making in both sports and iCasino and I believe we are well set up for a strong finish to the year”.
Daniel Politzer, an analyst at Wells Fargo, raised his recommendation on Caesars Entertainment, Inc. (NASDAQ:CZR) Entertainment to Buy with a $56.00 price target, noting the company’s outstanding Q2 financial results, anticipated rise in EBITDAR, and potential asset sales. The company’s strong free cash flow and consistent growth are apparent in the positive forecast.
It is the Best Sports Betting Stocks to Buy Now and 13 analysts have collectively rated the stock as a “Buy.” The average price objective of $53 indicates a possible gain of 42.63% from the current stock price of $37.16.
Parag Vora’s HG Vora Capital Management is the shareholder in the company, with 3,300,000 shares worth $131.14 million.
Overall CZR ranks 2nd on our list of the best sports betting stocks to buy. While we acknowledge the potential of CZR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CZR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
