The sports betting sector is witnessing substantial growth, fueled by:

• Increased legalization (now legal in 38 states plus D.C., with six more states considering legislation)
• Growing interest in women's sports (+190% increase year-over-year in bets on women's college basketball games on Caesars Sportsbook)
• Normalization of online betting at large

The AGA predicts that U.S. gamblers will wager more than $2.72 billion on this year's national tournaments, nearly doubling the betting volume of the Super Bowl.

DraftKings – a key player in the online sports betting market – has seen a 30% year-over-year rise in mentions during the 2024 March Madness, reaching multi-year highs.

However, DraftKings faces stiff competition from FanDuel, its top online rival, which has surpassed DraftKings in mention volume and web visits for the first time in years.

FanDuel's recent outsized growth in consumer interest is attributed to superior payout speed, promotional variety, and live betting options. Moreover, FanDuel's acceptance of PayNearMe for cash deposits gives it an edge, a convenience DraftKings currently lacks.

Despite this rivalry, the sports betting market's expansion is a collective lift, benefiting all players.

As new markets open, significant investment in promotions is essential, yet this also means increased profitability potential as these markets mature.

Last quarter DraftKings reported a 57% rise in third-quarter revenue to $790 million, with a 40% increase in monthly unique payers to 2.3 million. The company also raised its revenue forecasts for the coming fiscal years, indicating confidence in sustained growth and sending shares higher (+36% over the last 3 months).

A new partnership with Barstool Sports has further enhanced DraftKings' brand exposure, although its impact is yet to fully materialize.

Looking ahead, we’re watching interesting ripple effects of another converging macro trend: AI.

AI's role in personalizing betting experiences is significant, but it also brings cybersecurity risks, with potential losses from AI hacking during NCAA tournaments estimated at over $18 billion.

We’ve got a close eye on DKNG, but expect its shares to continue to benefit from (increasingly) nationwide adoption.