3 Sports Betting Stocks Positioned for Massive Growth

The Supreme Court’s decision last week to strike down The Professional and Amateur Sports Protection Act, a law which made sports betting illegal across much of the U.S, has triggered a veritable gold rush in the sports betting world. Deals both minor (Metric Gaming partnering with Nektan) and major (Paddy Power Betfair buying FanDuel) have quickly been executed in the wake of the landmark decision, which will now put the power to legalize sports betting in the hands of individual states.

Estimates vary widely as to the potential size that the legal sports betting market could reach, with figures ranging anywhere from $50 billion to $400 billion. The current illegal market is estimated to be a $150 billion one, and while it seems unlikely that a legal market wouldn’t be able to at least eclipse that, it’s not a given that every state will automatically legalize sports betting, though there will seemingly be little reason not to thanks to the tax revenue it will generate (pegged at between $50 million and $100 million annually in New Jersey).

Regardless of what the market size ends up being, it’s going to be huge where there was essentially nothing just days ago. Meanwhile, sports betting-related stocks have posted solid but hardly spectacular gains since the ruling, despite the enormous growth potential they now have. While the competition over the U.S sports betting market will be fierce, we’ve identified three companies that are positioned to benefit from it the most. We’ll take a look at those stocks below.

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Churchill Downs, Inc. (NASDAQ:CHDN)

Churchill Downs, Inc. (NASDAQ:CHDN) is another company that quickly capitalized on the sports betting opportunity, entering into a partnership with Golden Nugget Atlantic City to provide the casino resort with its iGaming and sports betting products. New Jersey is expected to be the first state to legalize sports betting outside of Nevada, with a Legislature vote on the matter planned for June 7, so Churchill Downs should see money from the venture begin to roll in almost immediately.

Churchill Downs, Inc. (NASDAQ:CHDN) is also well positioned for U.S sports betting on the mobile and online fronts, owning the largest legal wagering platform in the country, TwinSpires.com. Churchill Downs should have little trouble expanding the platform beyond bets on horse racing to allow for wagers on sports matches.

On the next page we’ll look at two other stocks that look like big winners as legal sports betting sweeps across the U.S.

Stars Group Inc (NASDAQ:TSG)

No company timed the Supreme Court decision better than online poker giant Stars Group Inc (NASDAQ:TSG), formerly known as Amaya, and the owner of the world’s largest poker site, PokerStars. The Canadian company shelled out $4.7 billion last month to acquire the U.K’s Sky Betting & Gaming, which consists of five brands, including Sky Poker and Sky Bingo.

However, the company’s leading sportsbook platform Sky Bet was clearly the main attraction, with Stars Group’s CEO calling it the ideal complement to his company’s leading poker platform. While the looming (at the time) Supreme Court decision gave the purchase that much more upside potential, Stars Group had been eagerly searching for a strong sportsbook to pair with its poker platform for some time, making a failed attempt to purchase another U.K sportsbook, William Hill, in 2016. The U.S will now offer Stars yet one more growth market for Sky Betting as it expands it into legal markets throughout the world.

Scientific Games Corp (NASDAQ:SGMS)

Scientific Games Corp (NASDAQ:SGMS), a provider of sports betting and casino gaming software, called the Supreme Court ruling an “unprecedented opportunity” for companies in the industry, suggesting that it could lead to the greatest explosion in the U.S gaming industry in decades. The company’s OpenBet sportsbook platform has been used by some of the U.K’s leading sportsbooks, including the aforementioned William Hill, Paddy Power, and SkyBet, all of which have their sights set on the U.S market.

Scientific Games Corp (NASDAQ:SGMS) should also benefit from its existing customer base in the lottery industry, which is also expected to jump headlong into sports betting. Scientific Games already provides omni-channel sports betting solutions to lottery corporations in countries where sports betting is legal, including an online platform and self-service betting stations.

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