New Jersey remains the sports betting capital of the country. It took in almost $743 million in wagers in February, a 244% increase over the year-ago figure and well ahead of second-place Nevada's $544 million.
But March could be even bigger because the National Collegiate Athletic Association's March Madness basketball tournaments are under way. Because only football surpasses basketball in the number of bets placed in New Jersey, both FanDuel (owned by Flutter Entertainment (PDYPF +2.58%)) and DraftKings (DKNG +2.27%) -- the two biggest sportsbooks in the state -- could reap a windfall as New Jersey potentially becomes the first state to ever lodge $1 billion in sports wagers in a single month.
Image source: Getty Images.
A sportsbook duopoly
The secret to New Jersey's phenomenal growth, and FanDuel and DraftKings' dominance, has been the state's embrace of online betting. That has made it easy for gamblers to bet wherever and however they want, including from surrounding states, as the only requirement is essentially being physically present in the state to place a bet.
The NCAA tournaments, though, could be New Jersey's last hurrah. Competition from Pennsylvania is growing, and New York is considering legislation that would authorize mobile betting. If enacted, it could siphon away a sizable chunk of New Jersey's revenue, as an estimated 25% of the state's betting revenue comes from New York gamblers. Once again New Jersey might find itself living up to Benjamin Franklin's critique that the state is a barrel tapped at both ends.
Investors in DraftKings or Flutter Entertainment have no such worries. They will be the sports betting leaders wherever the bets are coming from.
DraftKings, which is partnered with Resorts casino, generated a combined retail and online $7.9 million in revenue in February and $23.5 million year to date. That makes it a distant second best behind FanDuel, which is partnered with the Meadowlands racetrack just miles from New York City.
The racetrack's retail sportsbook generated $2.3 million in revenue in February and $7.3 million year to date, but it also generated $24 million in online revenue last month, or $66.7 million year to date, primarily from FanDuel's app.
Because this year's March Madness games have been the most-streamed ever, bettors may be more attuned than ever since fans have been fairly starved for sports during the pandemic.
Data from video analytics firm Conviva shows more than a billion minutes were streamed over 32 games in just two days, with television handily beating computer viewing, 68% to 18% (the Roku platform also far outpaced Amazon.com's Fire TV as the preferred viewing option, 40% to 26%).
Billion-dollar baby
Dustin Gouker, lead analyst for industry site PlayNJ.com, says that while MGM Resorts' BetMGM app is growing, it has a long road ahead to close the gap with the industry leaders: "FanDuel and DraftKings have dominated the market since launch, and there really hasn't been a major change in that dynamic since 2018."
March Madness is "the largest sports betting holiday of the year," according to PlayNJ's Eric Ramsey, "and in New Jersey, basketball in general tends to draw a lot of action. In other words, it's possible New Jersey could become the nation's first state to generate more than $1 billion in sports bets in a single month."
That puts the state's biggest sportsbooks in a full-court press to drive the greatest returns this month from that effort, making them championship stocks to invest in.
