Investors willing to wager their hard-earned money on casino companies may want to take one thing into account: When gamblers win, these stocks lose.
The 2024 NFL season was an enormous financial opportunity for companies like DraftKings, Flutter Entertainment, Caesar’s, and MGM Resorts. With sports betting now legal in 38 states, Americans poured an estimated $35 billion into wagers on football games, with $1.39 billion bet on the Super Bowl alone, according to the American Gaming Association.
But it turns out that the NFL season was also an enormous financial burden on these companies, for one simple reason: The favorites kept on winning.
Financial fumbles
When gamblers place their bets, they’ll often put their money on the favored team in any given matchup because, believe it or not, they want to win. Casinos and sports betting apps that are on the hook for those wins obviously would prefer it if their customers lost, so they’ll massage the odds for matchups in order to entice customers to bet on the underdog to secure a bigger payout, or highlight hard-to-win parlay bets with huge bonuses.
But last season the underdogs kept on losing, forcing casinos to shell out big bucks to customers all-too-happy to rake in their winnings. It was so bad, in fact, that DraftKings reported a 16% decrease in average revenue per user last quarter, while Flutter Entertainment, which runs FanDuel, reported a $205 million blow to EBITDA thanks to NFL bets late last year.
“The 2024/2025 NFL season to date has been the most customer friendly since the launch of online sports betting with the highest rate of favorites winning in nearly 20 years,” Flutter Entertainment management warned in January.
Cinderella story
Now, March Madness has arrived—and casino operators are hoping for one shining moment of profitability.
The American Gaming Association expects Americans to bet about $3.1 billion on the NCAA tournament this year, over 14% higher than in 2024. That gives sportsbook stocks a chance to recover recent losses—and they sure need it. Flutter Entertainment is down over 17% in the last month, while DraftKings has tumbled 24% over that same period.
The tournament’s 64 games are expected to draw even more viewers this year—and you better believe that casino operators are going to be watching these games more closely than anyone else.—MR
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