Sports Betting Monthly Report | February

14 February 2022

Sports Betting ETF Monthly Report: Key Takeaways

  • BetMGM provided a bullish market update on January 19th increasing their 2022 revenue guidance by 30% from $1b to “more than $1.3b”. This follows 2021 revenues of approximately $850m, implying over 53% yoy growth. Importantly, the company expects to generate “positive EBITDA in 2023”, following an EBITDA loss in 2021 of around $420-440m. [1]
  • This JV between MGM Resorts and Entain is performing better than expected with the company targeting market share of between 20-25% in US sports betting and iGaming. It is currently the number 2 operator with 24% market share for the three months ending November 2021. It has higher market share at 30% in iGaming, which is a typically a more profitable category than sports betting. [1]
  • At the industry level, the company believes the total addressable market will reach $32b, based off current player metrics. This represents a 16x increase from the market size of approximately $2b in 2020. New York Sports Betting has been a particular bright spot with revenues tracking ahead of initial expectations. [2] Extrapolating January data, Bank of America analysts, estimate the market size in New York to be around $900m, which is 3x their previous estimate of $300m. [2] They also expect the total US Sports Betting and iGaming market to reach $31b by 2030, which is similar to BetMGM guidance. They factor in around 25% in promotions which implies Net Gaming Revenues (NGR) of $23b and stabilized EBITDA margins of between 25% and 30%. 
  • In other company news, DraftKings share price has been down 70% since September and underperforming the Online Gaming sector which was down 46% during the same time frame. This is despite some analysts, such as Bank of America, increasing their 2023 revenue and EBITDA estimates by 10%, implying a more attractive valuation. They expect 2023 revenues of $2.9b bit still heavy EBITDA losses of around $571m as the company invests in customer acquisition and other start up costs. [3]
  • The Fischer Sports Betting and iGaming ETF has also traded down to $5.63 given the sell off in the many of the stocks in the index. [4] This is despite better than expected revenues and analyst upgrades. Our investment thesis remains intact. Sports Betting and iGaming revenues are expected to grow rapidly in the coming years from wider legalization in most US states; technology upgrades that enhance the online consumer experience; product innovations such as in-game betting and new casino products. Our index has a balanced mix of companies across different parts of the value chain from consumer brands such as DraftKings to “picks and shovel” companies like Evolution Gaming. 

Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. 

 

Macro Outlook

  • The US Sports Betting and iGaming market is expected to expand 23x from $2.3 billion in 2020 to $53 billion in 2033, according to Goldman Sachs. [5] Europe and Asia are also expected to be high growth markets. [6]
  • Regulatory changes giving US states the right to legalise Sports Betting and iGaming is the major growth catalyst. Similarly, an easing regulatory landscape in markets such as Macau and Singapore fuelled massive growth in a short period of time. [7]
  • Other growth drivers include spending conversion from illegal to legal platforms, wider social acceptance of sports betting as an entertainment activity, technological improvements and expansion of product offering including in-play betting. [8]
  • Unlike other high growth industries, digital gaming can deliver high margins for leading operators in the near term, with expected EBITDA margins of 25-35% according to Morgan Stanley, DraftKings and MGM. Relatively moderate capex also drives strong Free Cash Flow and ROI metrics. [9]

 

Sports Betting ETF Performance (as of 31.01.2022)

 


1M

3M

6M

YTD

12M

SI

Fischer Sports Betting & iGaming UCITS ETF (Acc)

-10.63%

-24.79%

-17.81%

-10.63%

NA

-28.41%

Solactive Fischer Sports Betting and iGaming Index

-10.58%

-24.65%

-17.53%

-10.58%

-12.96%

-28.09%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31.01.2022

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. 

 

Learn more about our Sports Betting ETF

Download the PDF

Sign Up to Insights

Tell us how we can help