Reproduced from CivicScience; Chart: Axios Visuals

Sports betting stocks have been some of the best performers on the market this year, with DraftKings shares up 466% and Barstool Sports-backed Penn National up 176%.

The state of play: A new survey from CivicScience, provided first to Axios, shows sports betting likely has a great deal of growth potential. But much of that may be baked into already-lofty shares prices.

What's happening: Despite a national advertising strategy by the sector's big names, users are only permitted to bet on sports through the apps in one of the 18 states plus Washington, D.C., that have set up fully operational legal sports betting.

  • The CivicScience survey shows a large number of people in those states are still unaware of the apps.

Yes, but: Penn National and DraftKings' shares have been battered in recent days after a report from Deutsche Bank that threw cold water on the growth potential for the sector, spotlighting Penn National as being afforded “far too much credit” by investors based on “a lot of unfounded expectations.”

  • Penn's stock has fallen 14% since the Oct. 1 note was released and Draft Kings has seen a 12% decline.
  • “There has been little to no incremental legislation that advanced the iCasino or sports betting agendas in the U.S.,” and even less to back expectations for a doubling of the total addressable market (TAM) for sports, Deutsche analysts argued in the report.

With awareness still this low in the states that do offer sports betting, the companies' may not need immediate incremental TAM expansion to continue a torrid pace of growth in the medium term.

  • And as Axios' Kendall Baker reports, four other states have passed bills legalizing sports betting this year but are not yet operational, and nine more states have pending legislation on the matter.

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Dion Rabouin, author of Markets
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