The sports betting and iGaming sector could grow by more than 70% this year, according to Bank of America, with casino recovery on its way.
Bank of America’s Analysis
The sports betting and iGaming industry in the US is expanding quickly, as more states legalize sports betting, but has been significantly impacted by the economic downfall of the Covid-19 pandemic.
In September 2020, Bank of America (BofA) decided to step into the sports wagering world when it initiated coverage of DraftKings. At the time, BofA analysts said the sports betting and online gaming industry could reach $24 billion by 2030, up $1 billion year on year.
According to BofA equity analyst Shaun Kelley, the losses experienced by sports betting and iGaming businesses are due to efforts to bring in customers and marketing, as well as gaining market share. In his forecast, Kelley said those businesses could achieve 30% Ebitda margins once the industries are stable and big enough.
Sports betting and iGaming could grow by more than 70% in 2021, according to Kelley.
Sports Betting Legalized in 27 States in 2021
The cancellation and shutdown of most sports events and competitions due to the pandemic slammed sports betting revenue in 2020. This could still be a concern for 2021, as the calendar shift of games was hard on big markets, such as Indiana, Pennsylvania, and New Jersey.
Michigan and Virginia are expected to launch sports betting early this year, while other states including New York, Ohio, Maine, Georgia, Massachusetts, and Connecticut have been looking into its legalization.
Kelley expects 27 states to have legal sports wagering by the end of 2021, or 49% of the US population. A combined 24% of the US population for the next two years wil be into the market, against 10% for 2018, and 23% in 2019 and 2020.
Casino Recovery Underway
The casino industry’s recovery is underway and will rapidly increase in the second half of the year, Kelley said.
He estimated that revenue per available room (RevPAR) in Las Vegas will increase by 25% to 30% year-over-year, with 5% to 10% below 2019 turnover.
Kelley remained neutral but raised Caesars Entertainment‘s price target from $65 to $75, citing a surprisingly quick recovery.