Since the return of live sports, gambling revenues have been historically strong. Events such as the National Football League draft enjoyed record gambling marks. This points to pent-up demand and bodes well for companies trying to carve success in the field.
With legalization decisions delegated to states, 22 have approved legislation to allow the activity since 2018. COVID-19 destroyed tax revenue streams which could incentivize more states to follow suit. Regardless, sports gambling is set to enjoy long-term growth. DraftKings is a popular pick within the space, but Penn National Gaming (NASDAQ:PENN) is best positioned to thrive.
Penn’s path forward
Penn National Gaming is a regional casino company operating in 19 states. COVID-19 has certainly been tough for the entire industry, but Penn’s credit and equity market activity has boosted its cash position to $1.4 billion. This is vital to continue investing aggressively in sports gambling.
While Penn does have physical sports books at its casinos, its main initiative is establishing a dominant presence in digital sports gambling. How?
Earlier this year, CEO Jay Snowden announced a 36% stake in Barstool Sports, with warrants to acquire another 14%. Together, the two companies plan to release a digital sports betting app this year called Barstool Sports Book. Online gambling alone is set to grow to $103 billion by 2025, powered by an 11.5% annual growth rate. Furthermore, there is a black-market