FUBO - Sports betting stocks are on watch amid bracket-busting NCAA basketball tournament

2023-03-30 08:38:49 ET

The bracket-busting nature of the NCAA college basketball tournament this year may be helping the house with its edge, according to analysis from Macquarie.

Analyst Chad Beynon and team calculated an above-average hold rate of 8% after a rash of upsets during the Sweet Sixteen and Elite Eight games including mid-major Florida Atlantic beating the Big 12's Kansas State, a team that was a heavy betting favorite of the public and had created some risk for sportsbooks that do not always have perfectly balanced betting action.

Sports betting operators in New York fared particularly well in the early rounds of the NCAA tournament with a sports betting hold of 8.5% on volume of $460M. The volume was the highest since the 2022 Super Bowl.

Beynon warned that the lack of traditional basketball powerhouses could cut into betting volume for the Final Four matchups between during the weekend of San Diego St. (#5 seed) vs. Florida Atlantic (#9 seed) and Miami (#5) vs UConn (#4). Macquarie's broad view for Q1 is that online sports betting GGR will be up 60% year-over-year on a hold percentage close to 8%.

"Given higher-than-expected customer acquisition in recently launched states, we expected slightly bigger losses in 1Q, but we expect for this to reverse as we move through 2023," he noted.

The push for profitability is the biggest theme in the sports betting sector for 2023 with investors focused on bottom lines and valuations.

Sector watch : Sports betting revenue in U.S. is forecast to top $10B this year

Sports betting/iGaming plays: DraftKings ( DKNG ), FanDuel/Flutter Entertainment ( OTCPK:PDYPY ), Caesars Entertainment ( CZR ), Penn National Gaming ( PENN ), Wynn Resorts ( WYNN ), MGM Resorts ( NYSE: MGM ), Entain ( OTCPK:GMVHF ), PointsBet ( OTCQX:PBTHF ), GAN ( GAN ), fuboTV ( FUBO ), Churchill Downs ( CHDN ), International Game Technology ( IGT ), Skillz ( SKLZ ), Bally's ( BALY ), Golden Matrix Group ( GMGI ), Bragg Gaming Group ( BRAG ), Elys Game Technology ( ELYS ), Paysafe ( PSFE ), Playtech ( OTCPK:PYTCF ), Esports Entertainment ( GMBL ), Sportradar ( SRAD ), Genius Sports ( GENI ), Gambling.com ( GAMB ) and Boyd Gaming ( BYD ).

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