Proactive Investors - US bookmakers are heading for a bumper start to 2024, according to broker Jefferies, which has reiterated buy recommendations on Entain (LON:ENT) and Flutter, two of the largest players in the market.
Ajed of the week's Super Bowl between San Francisco and Kansas City, the bank wrote: “Signs remain encouraging for the bookmakers, with high engagement and betting activity,” especially in the newly legalised areas such as Ohio.
By operator, the start to January has been particularly strong for DraftKings and FanDuel (Flutter), it noted, with gross gaming revenue (GGR) tracking up 54% and 34% year-on-year, respectively.
FanDuel remains the market leader with 52% GGR share, followed by DraftKings with a 33% share.
BetMGM [Entain 50%] also continues to have "a more encouraging start to 2024", with GGR up 19% year-on-year and share flat at 5%.
US rival Caesars' GGR is currently tracking down 18% YoY.
Sports margins have been strongest year to date for FanDuel at 12.5%, followed by 10.3% for DraftKings, 8.1% for BetMGM and 6.6% for Caesars.
“Across the market, free bet spend as a percentage of GGR fell to its lowest level since the start of the NFL season (43.5%),
with each of the major incumbent operators continuing to cut promotions month-on-month.
"This was especially true for FanDuel, which cut free bet spending as a share of GGR to the lowest level to date (18.5%).
“While ESPN Bet's free bet spend was 176% higher than the #2 spender (DraftKings) in November, this fell to just 22% higher in December.
“FanDuel's promotional efficiency through December meant that while it achieved 36% share of market handle, share of market NGR was as large as 64%."
Elsewhere, the Georgia senate cleared a bill this week to legalise sports betting, notes the bank, though a constitutional amendment is required to be approved by voters in November.
Jefferies has buy recommendations on Entain and Flutter, with target prices of 1,215p and 19,500p.