Sports betting stocks surged on Wednesday following Missouri voters’ approval of an amendment legalizing regulated sports wagering in the state.
In midday trading, DraftKings (NASDAQ: DKNG) shares rose by 3%, while FanDuel parent Flutter Entertainment (NYSE: FLUT) saw a 2.51% increase. These two companies, the dominant online sportsbook operators in the US, had invested heavily in promoting Amendment 2, which allowed voters to decide on sports betting.
The amendment came to the ballot after several unsuccessful attempts by Missouri politicians to pass sports wagering legislation. It mandates a $500,000 licensing fee, a five-year permit term, and a 10% tax on gross gaming revenue (GGR).
Caesars Entertainment (NASDAQ: CZR), Penn Entertainment (NASDAQ: PENN), and Rush Street Interactive (NYSE: RSI) also experienced a boost following Missouri’s approval. Rush Street, already one of the top-performing gaming equities this year, increased by 5.11% at the time of writing.
Missouri’s decision has reinvigorated hopes for sports betting legislation in 2024, a year anticipated to be slow on this front. Georgia, previously considered the most probable state to approve sports wagering, did not pass the legislation.
According to Stifel analyst Steven Wieczynski, the market was likely pricing in a 50:50 chance of the amendment’s passage. After years of rapid geographic expansion, legislative momentum had slowed significantly, with Missouri being the only state to pass such legislation in 2024, adding roughly 2% to the addressable population. The inclusion of retail sportsbooks at land-based casinos in Missouri could attract operators like Century Casinos (NASDAQ: CNTY), Boyd Gaming (NYSE: BYD), Penn, and Caesars, enticing residents who currently travel to Illinois and Kansas for similar offerings. Wieczynski noted that the licensing and tax structure is accommodating and deviates from the recent trend of higher tax rates.
Other gains for Caesars and Penn may be attributed to another Missouri vote that rejected a new casino license for the Lake of the Ozarks. Caesars operates three venues in the state, while Penn runs one and a couple of others just over the Illinois border. This rejection likely indicated reduced competition, contributing to the positive reaction in the stocks.
Boyd and Century, both with land-based operations in Missouri, also saw their stock values rise at the time of writing.
