{"id":324753,"date":"2024-07-09T16:35:23","date_gmt":"2024-07-09T21:35:23","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=324753"},"modified":"2024-07-09T16:35:23","modified_gmt":"2024-07-09T21:35:23","slug":"draftkings-penn-among-discounted-gaming-stocks","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/","title":{"rendered":"DraftKings, Penn Among Discounted Gaming Stocks, Says Morningstar"},"content":{"rendered":"

It has not been a good year for the broader universe of US-based gaming companies. With the exception of DraftKings, which is higher though lagging the broader market, stocks tied to casino and sportsbook operators are mostly lower on a year-to-date basis while the S&P 500 is up almost 17%.<\/p>\n

\"ESPN
The ESPN Bet logo. Operator Penn Entertainment and rival DraftKings are considered attractively valued gaming stocks by Morningstar. (Image: ESPN Bet)<\/figcaption><\/figure>\n

Morningstar senior equity analyst Dan Wasiolek<\/a> notes the group has been hit by headwinds including \u201cangst over US sports and iGaming market competition and regulatory changes, as well as decelerating growth in US physical casinos after their strong demand recovery in 2021-23.\u201d However, he added that some value is emerging among the six domestic gaming stocks covered by the research firm.<\/p>\n

Perhaps surprisingly, Wasiolek views DraftKings (NASDAQ: DKNG)<\/a> — a stock almost universally seen as richly valued — and Penn Entertainment (NASDAQ: PENN) — a potential value trap owing to its 19% 12-month slide — as among the gaming stocks that are now attractively valued. Despite the aforementioned issues, the longer ranging outlook for iGaming and online sports betting is constructive and that could be to the benefit of DraftKings, Penn, and select competitors.<\/p>\n

A combination of new users, consumers spending more on these activities, and an increasing number of states permitting sports betting and iGaming has Wasiolek predicting strong sales growth. He anticipates industry revenue growth of 19% in 2024, 24% in 2025, 13% in 2026, and 27% in 2027,\u201d according to Morningstar.<\/p><\/blockquote>\n

The research firm noted that over the past six quarters, US commercial gaming revenue has averaged growth of 9.3%, or more than quadruple the rate of GDP growth in this country.<\/p>\n

Outlook for OSB, iGaming Growth Supports Some Gaming Stocks<\/h2>\n

Currently, some form of sports wagering is permitted in 38 states and Washington, DC. That covers about two-thirds of the US adult population. The big kahunas of California and Texas aren\u2019t on that list, Florida doesn\u2019t have a competitive market, and Georgia disappointed on the legislative front this year.<\/p>\n

\n

However, the long-term outlook is arguably bright for companies like DraftKings and ESPN Bet operator Penn because Wasiolek sees seven more states adding sports wagering by 2027, covering 90% of the US adult population. Texas could be part of that group<\/a>.<\/p>\n<\/div>\n

\u201cTexas is among the states with potential approval, and it represents 8%-9% of the country\u2019s adult population, leading the industry\u2019s revenue growth forecast to around $23 billion in 2027 from $11 billion in 2023,\u201d added Morningstar.<\/p>\n

Wasiolek has a similarly bullish outlook on iGaming expansion<\/a> as the analyst sees the amount of states permitting that form of wagering ballooning to 10 to 15 at some next year from the current seven. States are \u201cincentivized by the potential for incremental tax revenue from the activity,\u201d noted Wasiolek.<\/p>\n

If that expansion occurs, Morningstar\u2019s revenue estimate could jump to $12 billion in 2027 from $6 billion last year<\/strong>.<\/p>\n

DraftKings, Penn Could Add Sports Betting Market Share<\/h2>\n

In the domestic online sports betting space, a clear duopoly<\/a> comprised of Flutter Entertainment\u2019s (NYSE: FLUT) FanDuel and DraftKings has emerged. Wasiolek sees DraftKings adding market share and eventually stabilizing in the high 20s on a percentage basis\u00a0 up from the mid-20s last year. Morningstar has fair value estimate of $49 on that gaming stock, implying upside of 33.3% from today\u2019s close.<\/p>\n

The analyst also forecast added market share for Penn\u2019s ESPN Bet, though not at the double-digit percentage some experts believe is necessary to move the needle. Morningstar\u2019s fair value estimate of $22 on Penn implies upside of 10%<\/strong>.<\/p>\n

\u201cWe estimate Penn\u2019s US Sports and iGaming share to increase to 6% by 2025, versus 4% in 2023, and hold within that range through 2027, driven by its ESPNBet launch in November 2023,\u201d concluded Wasiolek. \u201cPenn\u2019s capital expenditures dropped to 2.6% in the first quarter compared to 10.9% in the previous quarter, driven by the launch of ESPNBet. Sports and iGaming will account for 16% of its 2024 sales.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

It has not been a good year for the broader universe of US-based gaming companies. With the exception of DraftKings, which is higher though lagging the broader market, stocks tied to casino and sportsbook operators are mostly lower on a year-to-date basis while the S&P 500 is up almost 17%. Morningstar senior equity analyst Dan […]<\/p>\n","protected":false},"author":46,"featured_media":294561,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,19,1074],"tags":[81903,81871,80968],"acf":[],"yoast_head":"\nDraftKings, Penn Among Discounted Gaming Stocks<\/title>\n<meta name=\"description\" content=\"DraftKings, Penn Among Discounted Gaming Stocks, Says Morningstar.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DraftKings, Penn Among Discounted Gaming Stocks\" \/>\n<meta property=\"og:description\" content=\"DraftKings, Penn Among Discounted Gaming Stocks, Says Morningstar.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2024-07-09T21:35:23+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/10\/ESPN-BET-Logo-Primary-1352x1080-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/\",\"url\":\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/\",\"name\":\"DraftKings, Penn Among Discounted Gaming Stocks\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/10\/ESPN-BET-Logo-Primary-1352x1080-1.jpg\",\"datePublished\":\"2024-07-09T21:35:23+00:00\",\"dateModified\":\"2024-07-09T21:35:23+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"DraftKings, Penn Among Discounted Gaming Stocks, Says Morningstar.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/draftkings-penn-among-discounted-gaming-stocks\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/10\/ESPN-BET-Logo-Primary-1352x1080-1.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2023\/10\/ESPN-BET-Logo-Primary-1352x1080-1.jpg\",\"width\":1200,\"height\":800,\"caption\":\"The ESPN Bet logo. An analyst is constructive on operator Penn Entertainment, citing multiple factors. 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An analyst is constructive on operator Penn Entertainment, citing multiple factors. 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