Jeremy Brevard | USA TODAY | Reuters
UMBC Retrievers guard Jairus Lyles (10) shoots the ball against Virginia Cavaliers forward Isaiah Wilkins (21) during the second half from the first round of the 2018 NCAA Tournament at Spectrum Center.
Gaming stocks jumped after the Supreme Court’s ruling on sports gambling however Wall Street found only a couple of betting companies are going to see a notable boost.
Regionally focused Boyd Gaming along with Penn National “are likely the biggest beneficiaries in our coverage given their smaller market caps along with exposure to numerous states,” Morgan Stanley analysts wrote in a note Tuesday.
Morgan Stanley believes sports betting will likely represent less than 2 percent of the $0 billion in U.S. gaming revenue, with the most optimistic case setting the bar at 5 percent. If Boyd along with Penn claim a 10 percent market share from the $2 billion market, Morgan Stanley estimates the two gaming companies could bring in about $1.50 per share to $1.0 per share in additional value.
“[The ruling will be] a slight positive for regional gaming stocks,” Morgan Stanley said.
Sports gambling will be coming quickly to about a dozen states after the Supreme Court opened the door to the practice. brand-new Jersey will be required to tax sports betting “at relatively reasonable levels,” Morgan Stanley said, with an 8 percent tax on “land-based” bets along with 12.5 percent for mobile bets.
The most notable challenge to states remaining will be through Congress, according to Cowen analysts. However, “sports gambling opponents lack the votes to enact a ban,” Cowen said. States are hungry for the tax revenue, which could be as much as $3.4 billion per year, according to Cowen.
“which will be money which states remain desperate for as they try to meet infrastructure, education along with different spending needs,” Cowen said.
Morgan Stanley said there will be also potential value for media companies, “including sports team along with rights owners” such as Liberty Media along with Madison Square Garden, as well as benefit for Disney along with MSG Networks “through increased advertising on live sports content.”