USA Online Sports Betting Expansion May Be Winding Down
Analyst reports suggest that rising legislative and political challenges may see fewer states legalize online sportsbooks
Leading Deutsche Bank senior analyst Carlo Santarelli recently released a report on DraftKings, maintaining a Hold rating. He justified his decision with the unfavorable USA expansion conditions, reflecting on the political climate across the States. Santarelli predicted a slowdown in states adopting new sports betting legislation as compounding negative factors stifle progress.
Operators Will Have Little Avenue for Growth
Santarelli currently ranks among the top 100 analysts according to the investment advice platform TipRanks, sporting an impressive 64% success rate. As a specialist in the services sector and gambling industry, his predictions benefit from years of experience and in-depth observations and carry considerable weight.
The Hold rating on DraftKings was motivated by a mixture of positive and negative factors. The operator enjoyed a stellar 2022, hitting $2.2 billion in revenue for a significant 73% year-over-year increase. Such impressive financials would usually warrant a more favorable rating, but Santarelli argued that outside pressures could impact the entire US market and dampen DraftKings’ expansion ambitions.
Most Prospective Bills Face Ongoing Difficulties
The Deutsche Bank senior analyst examined some states considering online sports betting legalization, reflecting on the political situation and the likelihood of meaningful progress in 2023. While some jurisdictions actively work towards implementing the necessary legal framework, progress appears limited and suffers from a lack of political will.
The prospects, when looked at individually, are not ideal for the OSB operators… On the iCasino front, we see little to no real momentum for incremental state legalizations in 2023.
Carlo Santarelli, Deutsche Bank senior analyst
Texas remains the grand prize for online sportsbooks. Santarelli noted that powerful and persistent lobbying efforts netted some progress, but legislative efforts remain in their infancy. The proposed bill HB 1942, legalizing online sports betting, first needs to garner sufficient public support and will likely take at least a couple of years.
Georgia and North Carolina share similar difficulties. Both states have several failed sports-betting bills, which used up most of the remaining momentum and political will. North Carolina is in a slightly stronger position, as a reiteration of last year’s unsuccessful bill is currently making steady progress and will soon see a vote on the House floor.
Missouri’s HB 556 enjoys nearly unanimous industry support, receiving overwhelming approval in the lower house. However, Santarelli remained cautious regarding the Senate’s approval as political jostling could hinder or even derail the entire project. Kentucky likewise sent a sports betting bill to Senate, showing slow but notable progress despite expected adversity.
According to Santarelli, 2023 will be much leaner on US expansion opportunities than last year. Many states still lack the momentum to make significant legislative progress. The ones that have made strides in that regard still need to complete the arduous process of establishing proper regulation, meaning that operators looking to expand into untapped jurisdictions are out of luck.
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