With sports betting being legalized across the United States at a higher rate than ever before, analysts are anticipating that this year’s March Madness tournament could top $1 billion in legal wagers. Not only is sports betting legal in many states, it is easier than ever to access online sportsbooks right on your smartphone, without ever having to head to a brick and mortar casino. In honor of March Madness, let’s take a look at how two of the leaders in the sports betting industry stack up against one another as long-term investments.
Penn National Gaming ($104.12|-2.41%): It is hard to ignore what Penn has done over the past year, going from a $4 stock last March to its current price of $124.50 per share, representing a nearly 3,000% rise during that time. Led by outspoken leader of Barstool Sports, Dave Portnoy, Penn has re-established itself as one of the true leaders in the sports betting industry.
In September, Penn launched the Barstool Sportsbook for smartphones, and have opened several brick and mortar sportsbooks in newly legalized states like Michigan and Indiana. Coupled with the fact that Penn was recently included into the benchmark S&P 500 index, and it seems like this company can do no wrong. Penn’s 36% stake in Barstool has returned its value many times over already, and as Portnoy continues to gain popularity across social media and pop culture, Penn will continue to ride on the coattails of Barstool’s followers. When you have a social media engine like Barstool, advertising is free.
DraftKings ($62.31|1.96%): DraftKings came public via a SPAC IPO part way through 2020, and has since surged to its current price of around $67 per share. While Penn focuses mostly on sports betting and horse racing, DraftKings has a near stranglehold on the Daily Fantasy Sports industry, as well as integrating its sportsbooks and sports betting app into the mix. The Boston-based company has forged many high profile relationships throughout the year including building its own sportsbook inside of Wrigley Field in Chicago, once sports betting was legalized in Illinois.
DraftKings also recently signed an exclusive cable TV deal with DISH to make live wagers within the DraftKings app while watching sports games through an internet-connected Hopper receiver. DraftKings already had the lucrative deal with the NFL to be its official sportsbook and DFS partner, and has recently signed on with the UFC as well. This is the company that is best positioned to take advantage of the increase in the legalization of sports betting around America.
Our Pick: DraftKings. Penn has been a great story and Portnoy will continue to take the Penn brand along for the ride. But DraftKings is already the dominant name in both sports betting and fantasy sports, and with new lucrative deals being announced seemingly every week, the brand is sure to see new heights by the end of 2021.
Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.