Deutsche Bank: World Cup Betting Handle Pacing Ahead of Estimates

The World Cup’s field of 16 will be officially set following three matches on Friday, but it’s already clear that the most prestigious soccer tournament is driving increased betting handle for sportsbook operators.

Using New York handle data as the metric, Deutsche Bank analyst Steven Pizzella upped his World Cup handle estimate for the past two weeks to $3.4 billion to $3.8 billion from a prior forecast of $3.3 billion. That projection covers 61 of the tournament’s 104 games. So it’s evident that from a volume standpoint, the World Cup is paying dividends for sportsbook operators, but that’s not necessarily true regarding hold — the profit retained operators retain on wagers.

Using New York as the measuring stick is pertinent because the Empire State is the largest competitive sports betting market in the U.S. By some estimates, Flutter Entertainment’s (NYSE: FLUT) FanDuel and DraftKings (NASDAQ: DKNG) combine for 70% market share in the fourth-largest state.

World Cup Providing Some Help for Betting Stocks

As Pizzella points out, the World Cup hold picture is murky, but the event is still providing some support for sports betting equities. Over the past month, shares of Flutter and DraftKings are higher by 4.63% and 1.85%, respectively.

There are some moving parts to thesis, but it’s possible those gains can grow over the near-term, particularly if knockout-stage betting activity accelerates as expected. Sportsbook operators could also benefit from U.S. team advancement, which could “materially increase betting demand,” according to Pizzella.

The other teams for investors to keep eyes on are Brazil, England and Mexico, which are widely regarded as “secondary” teams for U.S. soccer fans. Mexico, which has never advanced beyond the round of 16, is popular in this country due to a sizable population of Mexican Americans. On the other hand, there’s risk to sports betting equities if high profile sides don’t make deep runs.

Specific to Flutter, deep runs by Brazil and England could be beneficial to the stock because the company is one of the largest sportsbook operators in Europe and Latin America.

World Cup Spurring Prediction Market Activity, Too

The aforementioned World Cup handle that could be notched by sportsbook is all the more impressive when considering the quadrennial tournament is spurring significant volume increases across prediction markets.

As one example, two of Kalshi’s highest volume weeks on record arrived against the backdrop of World Cup group play. Likewise, the tournament is sparking surging turnover on DraftKings Predictions and Robinhood.