Media companies entering sports betting could trigger casino operators' capitalization

Fox Corporation and Walt Disney’s ESPN are entering the world of sports betting, and there’s a chance even more media companies will want to expand into betting, says investment consultant Telsey Advisory Group, which "could act as a catalyst for the casino operators that are able to monetize their access to sports betting," analyst Brian McGill wrote in a research note, as reported by Bloomberg. “We don’t think any of this [is] priced into the stocks of the regional” gaming companies, he said.

Media companies will look to leverage the access of gaming operators, Telsey says. And as more states move to legalize sports betting, McGill sees Penn National Gaming, Churchill Downs, Full House Resorts, Boyd Gaming Corp., Golden Entertainment and MGM Resorts International as among those best positioned to capitalize. The S&P Supercomposite Casinos and Gaming Index showed an upward trend last week, rising 1.8% intraday on Thursday.

"We are still in the early innings in overall legal sports betting, but the market does look like it will be significant for casino operators," McGill wrote. Telsey pointed out Fox Sports estimated that U.S. sports betting revenue would reach USD 9.6 billion by 2025.

Just over a week ago, The Stars Group and Fox Sports announced a long-term commercial agreement to launch 'FOX Bet', the first-of-its-kind national media and sports wagering partnership in the United States. A few days later, Caesars partnered with ESPN to serve as its official odds data supplier across TV and digital and to build a TV studio in The LINQ Hotel & Casino Las Vegas.

Earlier this month, Sinclair Broadcast Group announced a deal that would see the firm pay Disney USD 10.6 billion for 21 regional sports networks (RSN) around the country. Sinclair's CEO said the company would be open to licensing some of the sports content it acquired in the deal to outlets such as Amazon, Disney and AT&T, and he estimated industry-wide up to USD 2 billion in new revenue would come in from sportsbook operators and other companies in the space.