Super Bowl to Generate $1.7 Billion in Legal Bets, Says Macquarie

The Super Bowl will drive $1.7 billion in legally placed bets this year with DraftKings (NASDAQ: DKNG) named the gaming stock with the most downside or upside leverage to the big game.

That’s according to a new report by Macquarie analyst Chad Beynon. In the note, Beynon said that with 160 million American adults having some access to regulated sports betting, Super Bowl LIX will generate $1.7 billion in legal bets, up 11% from last year’s game. Macquarie estimates approximately 11% of adults in the US will bet at least $100 on the NFL title game.

We think books will look to reduce their liability with most betting occurring closer to Sunday’s kickoff. If current trends stand, we estimate DKNG will have the highest exposure at +/-3.5% to current 1Q US cons revs based on various scenarios we analyze,” observes Beynon.

DraftKings and Flutter Entertainment’s (NYSE: FLUT) FanDuel are the two largest online sportsbook operators in the US. The duo and their rivals could use some relief on the Super Bowl after languishing through what was broadly described as a “customer-friendly” fourth quarter.

Chiefs, Under Will Help Sportsbooks

According to Macquarie estimates as of Tuesday evening, the biggest Super Bowl liabilities for sportsbooks were over the total of 48.5 and the Philadelphia Eagles on the moneyline. Said another way, gaming companies likely want to see the Kansas City Chiefs win in a low-scoring affair.

Should the Eagles win and the over hits, that could lead to a hold rate of -4%, said the analyst. DraftKings’ first-quarter revenue could rise or be pinched to the tune of 3.5% based on Super Bowl exposure.

Flutter’s upside/downside risk is about half that while Rush Street Interactive (NYSE: RSI) checks in at 1%, observes Beynon.

Other Super Bowl Factors to Watch For

The Super Bowl is the most wagered-on individual sporting event in the US, meaning it is material to sportsbook operators’ first-quarter results, but whether the results are favorable or not, the game is also a marquee customer acquisition opportunity.

While material to 1Q earnings, the more important opportunity rests in customer acquisition through campaigns like FanDuel’s “Kick of Destiny 3,” said Beynon. “For data provider Genius Sports (NYSE: GENI), we see less risk given its payment model and upside from in-play betting momentum spurred by big events like the Super Bowl, with in-play expected to grow at a compound annual growth rate of 31% through 2030.”

Forecasts indicate the number of bets on Super Bowl LIX will set a record, but the average wager size is poised to decline this year.