Sports betting stocks are surging despite the lack of live games
Despite the lack of live games, sports betting stocks have performed particularly well over the past month, highlighted by fantasy sports/betting platform, DraftKings, and gaming operator, Penn National.
By the numbers: Since going public on April 24, DraftKings' stock is up 82%, while Penn National Gaming — which acquired Barstool Sports in January — is up 130%.
Why it matters: This surge signals a wider truth about the sports betting industry — it is uniquely suited to emerge from the pandemic virtually unaltered.
- COVID-19 has plunged the global economy into a crisis, and some industries might never be the same (i.e. live events); but others, like sports betting, are poised to bounce back and essentially play the same role they did pre-virus.
- To put it another way, we don't know when sports will return — or what they'll look like when they do — but we do know that people will bet on them.
Between the lines: As the world remains largely shut down and people are stuck at home with little to do, they're more likely to turn to the vices that satisfy their basest instincts.
- "Gambling affects a primitive bit of the brain, a bit of the brain that, from an evolutionary perspective is less advanced and it's more about immediate gains," said addiction specialist Cyrus Abbasian.
- The sports schedule may be limited at the moment, but bettors tend not to discriminate, and there could be more betting interest than ever when sports resume in full.
What to watch: The coronavirus hindered what was supposed to be a monumental year for sports betting, but if the NFL and college football seasons are able to take place this fall, it'll go a long way towards softening the blow dealt by losing March Madness.
- Penn National expects to launch its rebranded sportsbook as the "Barstool Sportsbook" before the start of the NFL season, while DraftKings is the NFL's official daily fantasy partner and has millions of football fans on its platform.
The bottom line: Whether DraftKings and Penn National are uniquely positioned to succeed, or are just the most-popular proxies for an exciting new industry, sports betting appears to be, well, a good bet — even during a pandemic.
Go deeper: Coronavirus sends sports betting scrambling