By Ryan Bologna
Sportsbook stocks have been going downhill for a while now. For example, DraftKings is trading at less than $14, down about 80% in the last nine months. Fanduel, the other sportsbook giant, is not publicly traded but their owner, Flutter Entertainment, is trading at at just under $58 currently, down from its peak of about $109 in 2021.
One of the main factors in this decline is the ending of the COVID-19 pandemic. Casinos reopening has hurt the online sportsbooks. As much as people enjoy online sports betting, they still want to be in the casino environment to bet on and watch sports. This presents a bit of a challenge, unlike peak pandemic time when everyone had to bet from their coaches.
The sportsbooks spend a lot on customer acquisition via marketing. With so much competition they may not have a choice. So why might now be a good time to buy stock in these books?
Sportsbooks have to get licenses to be able to operate in each state. There are 30 states where sports betting is currently legal. DraftKings has gained access to 17 of them. Fanduel is operational in 15. So there is upside there. Additionally, More states will legalize sports betting when they realize the financial benefits of it. This means more states (including California, Texas and Florida) where these books can potentially operate in the future.
Once these sportsbooks gain approval in new states, they will run aggressive marketing and advertising campaigns to acquire customers as they do now. Keep in mind, this is likely a scenario where the strong survive. While the situation might look troubling now, we are still in the early stages of this massive market developing. Some investors who have strong stomachs are buying the dip now and betting on the future. Keep in mind, no one at Only Players is qualified to give financial advice, nor do we do well particularly well in the stock market.
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