Posted on: November 6, 2024, 11:37h.
Last updated on: November 6, 2024, 11:48h.
Sports betting stocks rallied Wednesday after voters in Missouri passed an amendment to legalize regulated sports wagering in the state.
In midday trading on Wednesday, shares of DraftKings (NASDAQ: DKNG) were higher by 3% while FanDuel parent Flutter Entertainment (NYSE: FLUT) was up 2.51%. FanDuel and DraftKings, the two largest online sportsbook operators in the US, were among the gaming companies that poured millions of dollars into Amendment 2, which gave voters a say on sports betting.
Amendment 2 was put to voters after Missouri politicians attempted and failed multiple times to pass sports wagering legislation. The amendment requires a $500K licensing fee, a permit term of five years, and a 10% tax on gross gaming revenue (GGR).
Joining DraftKings and Flutter in the Missouri-induced rally were Caesars Entertainment (NASDAQ: CZR), Penn Entertainment (NASDAQ: PENN), and Rush Street Interactive (NYSE: RSI). Already one of this year’s best-performing gaming equities by a wide margin, Rush Street was up 5.11% as of this writing.
Missouri Lifts 2024 Sports Betting Legislative Spirits
This was widely expected to be a sluggish year on the sports betting legislative legislation front with Georgia viewed as the most likely of the mid-sized to large states to approve that form of wagering. However, that state failed to do so.
Based on polling, we suspect the market was pricing in ~50:50 odds of passage. Following multiple years of rapid geographic expansion, legislative momentum has decelerated significantly with Missouri the only state to pass in 2024 adding ~2% addressable population,” wrote Stifel analyst Steven Wieczynski in a report out on Wednesday.
Wiecyznski said the inclusion of retail sportsbooks at land-based casinos in Missouri could be additive for operators, including Century Casinos (NASDAQ: CNTY), Boyd Gaming (NYSE: BYD), Penn and Caesars. Brick-and-mortar sportsbooks in Missouri could help operators attract residents who have been going to Illinois and Kansas casinos that have comparable establishments.
“License & tax structure are also accommodative, and deviate from [the] recent trend of higher tax rates,” added Wieczynski.
Another Vote Helped Caesars, Penn
While Caesars Sportsbook and Penn’s ESPN Bet are likely to bid for online sports betting licenses in Missouri, another vote in the state may also be contributing to Wednesday gains for those stocks. Show Me State voters rejected a proposition on a new casino license for the Lake of the Ozarks.
Caesars runs three gaming venues in the state while Penn runs one with a couple of others just over the Illinois border, indicating the stocks may be responding favorably to voters brushing back an amendment that could have brought new competition.
Boyd and Century, which also have land-based footprints in Missouri, are also trading higher at this writing.
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