Three safe bets on the growing online gambling sector
Professional investor Aaron Fischer, creator of the Fischer Sports Betting and iGaming ETF, picks three of his favourite online gambling stocks.

We have a bullish view on the global sports betting and iGaming (online gambling) industries. We are most excited by the US market, where Goldman Sachs expects revenues to increase 23-fold from $2.3bn in 2020 to $53bn in 2033 – a compound annual growth rate of 27%. The key growth drivers are pent-up demand and an easing regulatory environment, which now allows individual US states to decide whether to legalise sports betting and/or iGaming. Morgan Stanley expects the number of states offering sports betting to increase from seven in 2018 to 39 in 2024.
There is now also greater social acceptance of betting on sports. Technological improvements have led to better product offerings, such as the wider availability of “in-play” betting (placing a bet during a live event), and a better overall user experience, such as live-sports streaming directly within sports-betting apps.
A cash cow
What makes this industry particularly interesting is not just its rapid revenue growth, but its strong conversion-to-earnings and free cash flow. High earnings before interest, taxes, depreciation and amortisation (Ebitda) margins of 30%-35% will be driven by marketing and brand building, maximising customers’ engagement through various channels and platforms, and by technological efficiencies.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Due to low capital expenditures, free cash flow and return on invested capital are very high. There are many ways to play this theme, including large firms serving consumers directly and “picks and shovels” plays providing the goods, services or technologies needed to make the final product.
DraftKings (Nasdaq: DKNG) has become the market leader in digital gaming, having started out in daily fantasy sports, where players compete against others by creating a team under a budget and earn points based on the real-world performance of the players. The company made strategic acquisitions and invested heavily in technology and acquiring customers.
It is targeting long-term market shares of between 20% and 30% in sports betting and 15% and 20% in iGaming, implying annual sales of between $5bn and $7bn and Ebitda of $1.7bn, compared with an expected Ebitda loss this year of $400m, estimates Goldman Sachs. The bank’s price target is $77, implying upside of 71%.
BetMGM’s market-leading joint venture
MGM Resorts International (NYSE: MGM) and Entain (LSE: ENT) have a joint venture called BetMGM. It boasts the leading market share in iGaming, one of the most profitable product categories.
BetMGM combines Entain’s technology with its wide customer base, top brands and bricks-and-mortar casinos of MGM Resorts. Thanks to start-up costs, it incurred losses of $100m in the third quarter of 2021, but the group is targeting long-term annual sales of $6bn.
Evolution Gaming (Stockholm: EVO) is a Swedish firm specialising in “live casino” offerings, using live dealers to provide a more casino-like experience. Its products plug into B2C (business-to-consumer) platforms, so it is a B2B (business-to-business) supplier, with Ebitda margins of 70%. It is one of the most profitable firms in the industry, and Ebitda is expected to reach $1.5bn in 2023.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Aaron Fischer is the creator of the Fischer Sports Betting and iGaming UCITS ETF
-
Average pension pot by region – how do your retirement savings compare?
Making sufficient savings for retirement is critical to ensure you can enjoy your later years without too many financial worries, but new data suggests some are saving far more than others. We look at the average pension pot by region.
-
Could colour diamonds add a sparkle to your portfolio?
Diamonds of various shades never go out of fashion, says Chris Carter
-
Could colour diamonds add a sparkle to your portfolio?
Diamonds of various shades never go out of fashion, says Chris Carter
-
Okta: an undervalued cybersecurity play
Okta provides vital security services and appears cheap considering AI’s growing prominence
-
Should you invest in Pakistan – the Vietnam of South Asia?
Opinion If Pakistan is now serious about reform, it’s time for investors to buy, says Maryam Cockar
-
Why it pays to invest in family firms – and how to buy in
It makes sense to invest in family firms. Here are some of the best to buy now
-
'Why you must own gold and Bitcoin'
Opinion The world is dedollarising, and gold and Bitcoin are the only alternatives. Buy now, says Dominic Frisby
-
8 of the best properties for sale with mountain views
The best properties for sale with mountain views – from an Arts & Crafts house with holiday lets in the Carding Mill Valley in Shropshire to a highland lodge with wood-burning stoves near the Rogie Falls in the Scottish Highlands
-
'Where to find the world’s hidden gems offering durable growth and value'
Opinion Joe Bauernfreund, chief executive officer and chief investment officer, AVI Global Trust, highlights three businesses where he'd put his money
-
What are wealth taxes and would they work in Britain?
The Treasury is short of cash and mulling over how it can get its hands on more money to plug the gap. Could wealth taxes do the trick?