The 2024 Super Bowl is poised to be a financial windfall for the Las Vegas Strip and sports betting operators. The combination of sports betting legalization in new states and a highly-anticipated game featuring the Kansas City Chiefs and San Francisco 49ers has led to forecasts predicting legal wagers of over $1.35B across the 39 regulated markets. Notably, legal Super Bowl betting will be taking place in Florida for the first time this year. Other states partaking in the betting frenzy include Massachusetts, Kentucky, Maine, Vermont, and Nebraska.

According to Legal Sports Report, U.S. sports betting operators stand to secure over $100M from Super Bowl 58, with prop bets related to Taylor Swift and Kansas City Chiefs star Travis Kelce significantly boosting the action. In fact, major sportsbooks have already seen record-setting volumes for prop bets, attributing this surge to the “Taylor Swift effect.” Sportsbooks tend to have a higher hold rate on prop bets during the Super Bowl as compared to normal action.

The Super Bowl taking place in Las Vegas will only amplify the spotlight on the Strip. Hotel room rates in the city have surged since the teams secured their spots in the Super Bowl, continuing a strong trend since November. Even with the opening of the high-profile Fontainebleau Las Vegas, which added new room supply, hotel room rates have soared. The Nevada Gaming Control Board recently reported that Las Vegas Strip GGR (Gross Gaming Revenue) was up 11% year-over-year in December, reaching a record $905M. Notably, baccarat continues to be a major profit center for the casinos. The convention calendar for the Las Vegas Strip looks promising, and indications show that high-end consumers are not pulling back on their Vegas expenditures. Additionally, major events such as NFL football, F1 Racing, and Sphere (SPHR) concerts are expected to draw substantial crowds to the region this year.

For investors, an incremental boost is anticipated for stocks such as Red Rock Resorts (RRR), VICI Properties (VICI), Golden Entertainment (GDEN), Hilton Worldwide (HLT), and Bally’s Interactive (BALY) due to the heightened attention on Las Vegas.

On Wall Street, Morgan Stanley has warned about potential near-term margin pressure due to increasing promotions from both existing and newer businesses such as BetMGM, ESPN Bet, and Fanatics (FANA). However, historical results suggest that creating permanent inroads may be more challenging, as established market share leaders have been able to reinvest in their products and promotions. Notably, Morgan Stanley’s long-term view of the overall market share dynamics remains unchanged, with companies like FanDuel, DraftKings, BetMGM, Caesars Sportsbook, and ESPN Bet leading the pack. Looking at a broader perspective, Oppenheimer estimates that the U.S. legal online sports betting market will grow by 25% in 2024, reaching $15.8B as more states regulate digital wagering.

Keeping an Eye on Downloads

The top sports betting apps by iOS downloads over the last ten weeks, in order, are FanDuel, DraftKings, Hard Rock, ESPN Bet, Betr, BetMGM, Bet365, Caesars, Fanatics, and PointsBet.

Entry of a New Participant

Flutter Entertainment began trading on the New York Stock Exchange last week after stopping trading on Euronext Dublin. The proposal to move its primary listing from the London Stock Exchange to the NYSE will be brought before shareholders at the company’s next annual meeting. Analysts suggest that a primary listing in the U.S. could elevate the profile of the entire sports betting sector.

A Diverse Investment Avenue

The Roundhill Sports Betting & iGaming ETF (NYSEARCA:BETZ) offers a broad approach to investing in the sports betting and iGaming sector. Its top holdings include Flutter Entertainment, DraftKings, Evolution AB, Entain Plc, Kindred Group, Churchill Downs, and Sportradar.

A Potentially Surprising Performer

Cathie Wood’s ARK Invest has shown increased interest in Genius Sports over the last week as part of its position in the ARK Next Generation Internet ETF (ARKW). Seeking Alpha analyst Stephen Tobin has given a favorable view of Genius Sports.