Sports Betting and iGaming Monthly Report | April

26 April 2022

Sports Betting ETF Monthly Report: Key Takeaways


The Sports Betting and iGaming stocks have had a poor start to the year, which has had a negative impact on the index. Heavier than expected marketing investments and concerns over the macro economy have been the main drivers.

Yet, recent trends in handle (wagering) and revenue numbers have been strong. The Jan/Feb Online Sports Betting (OSB) handle was up 18% sequentially, resulting in Q1 up 20% QoQ, according to Macquarie. [1] This follows a 97% increase QoQ in Q4 2021. iGaming (online casino) revenues were up 16% QoQ in Q4 2021 and Macquarie expects another 6% increase QoQ in Q1 2022. [2]

Source: Macquarie Insights [3]

On a full year basis, 2021 was an excellent year with North American Online Gaming revenues increasing by 159% to $8.1b with both strong growth in OSB and iGaming. Macquarie expects 53% growth in 2022 to $12.3b and eventually reaching $52b in 2030 – a 6x increase on current levels. [4]

Sports Betting is now live in 29 states, up from 20 states in 2020, 13 in 2109 and 7 in 2018. Sports Betting is expected to expand to 48 states by 2025. iGaming is now live in 7 states v 3 in 2018 and expected to reach 29 states by 2025, according to Macquarie. [5]

Source: Macquarie Insights [6]

Company revenues have also been strong with average sequential revenue growth of 41% QoQ. Of note, DraftKings increased revenues by 142% QoQ, Penn 64%, Flutter 66% and BetMGM 18%. [7]

Source: Macquarie Insights [8]

Quarterly revenues have been beating analyst estimates. Over the last two years, DraftKings have beaten revenue estimates by an average of 14% and Rush Street by 8%. [9] 

Despite stocks underperforming, analyst revenue estimates have been either flat or increasing. Jefferies expected a medium term TAM of $38b. [10] According to their analysts, average spending per player has been higher than expected but has been offset by a slower than expected legalization process in some states. [11]  

We expect M&A and ongoing consolidation to be a key catalyst for share price outperformance in the coming 12 months. We believe the leading players are beginning to emerge as reflected in market share estimates provided by the companies and Macquarie. BetMGM is expected to be the market leader with 20% share in iGaming. FanDuel, DraftKings and BetMGM are expected to be the top three players in Sports Betting with between 20-24% market share each. Macquarie also expects Penn and Caesars to be key players across both segments while Rush Street have expertise in iGaming and PointsBet in Sports Betting. [12]

Source: Macquarie Insights [13]

There were a number of recent transactions announced including BYD buying Pala for $170m and IGT buying iSoftBet for $175m. [14]

The challenge for the industry has been the heavier than expected marketing, customer acquisition costs (CAC) and other start up costs. Most analysts expect EBITDA to trough this year before recovering in 2023 and then reaching very healthy margins of between 25% and 40%. History suggests that the best time to buy stocks is when margins are their trough levels and we start to enter a period of positive earnings momentum including potential earnings upgrades.

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 nearly $40 billion in 2033, according to Goldman Sachs. Europe and Asia are also expected to be high growth markets. [15]

Regulatory changes giving US states the right to legalise Sports Betting and iGaming is the major growth catalyst. [16] Similarly, an easing regulatory landscape in markets such as Macau and Singapore fuelled massive growth in a short period of time. 

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. 

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. [18]



Sports Betting ETF Performance (as of 31.03.2022)








Fischer Sports Betting & iGaming UCITS ETF (Acc)







Solactive Fischer Sports Betting and iGaming Index







Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31.03.2022

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. 

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