Thomas Allen of Morgan Stanley expects $5bn in US sports betting revenue to open up to public companies by 2025.
Allen’s forecasts assume 12 states legalise sports betting this year and next, driving a $1bn market by 2020, and 31 states by 2025 making a $5bn market.
Revenues will be split among many different entities, Allen said, with 15 per cent going to state taxes, five per cent to federal tax, marketing expenses of 30 per cent and operating expenses of 20 per cent. That leaves about 30 per cent EBITDA margins, he noted.
MGM Resorts, Penn National and Boyd are best positioned among casino companies to benefit from sports betting based on direct earnings from betting and increased casino traffic, he said.
William Hill and Paddy Power Betfair are also well positioned, but competition will be high and likely gains from sports betting already appear priced into the stocks, Allen continued.
