The familiar catalysts of rising consumer penetration and increasing state-level legalization could drive the North American online casinos and sports wagering market to $42 billion, according to CFRA Research.
In a note to clients, analysts Andrew Tam and Tuna Amobi point out that the US sports wagering market is still in its formative stages, but gaining significant traction following the 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PAPSA). They call PAPSA a “watershed event in the evolution of this market.”
The analysts see the North American iGaming and sports wagering segments ascending to $25 billion to $42 billion by 2030. The latter projection is among the highest on Wall Street, but not the rosiest forecast. Earlier this year, Goldman Sachs said online sports betting and internet casinos could jump to $39 billion and $14 billion, respectively, by 2033.
Our more optimistic high case sees a $42 billion addressable market, driven by a significantly higher number of states legalizing,” said the CFRA analysts.
That forecast assumes 70 percent of Americans will have access to regulated sports in 2030 with 45 percent being able to participate in iGaming. The research firm’s more conservative $25 billion scenario assumes legal sports betting will reach 55 percent of the population with that percentage dipping to 25 percent for online casinos.
Massive Growth Forecast
Currently, sports wagering is live and legal in 21 states and Washington, DC, with another nine states legal, but not yet up and running.
None of the big three of California, Texas and Florida are close to going live with sports betting. However, Canada is close to passing single-game betting and the combination of that country coming on aboard coupled with expectations that at least one or two of the aforementioned will eventually join the party leads to bullish forecasts.
CFRA obliges with Amobi and Tam estimating compound annual growth rates (CAGR) of 23 percent to 30 percent over the next decade for the total addressable iGaming and sports betting markets. The analysts view increasing customer spending as a primary catalyst for the North American market going forward and there’s credibility to that thesis.
For example, FanDuel parent Flutter generated $60 in revenue per US customer last year, but that figure jumps to $65 for the operator’s British and Irish clients and almost doubles to $113 for its Australian players, according to CFRA.
Expect More Consolidation
The global gaming industry has long been a prime area for consolidation and that’s already proving true in the still nascent US online casino and sports betting arenas — a trend CFRA expects will continue.
Since late February 2018, 23 deals aimed at cross-border expansion or technology and media enhancements were struck in the industry.
“To this end, many of the recent deals have been motivated by the strategic need for cross-border expansion as a potential accelerant to gaining critical mass, given a somewhat challenging path to sustainable free cash flow and profitability that could remain elusive for several companies,” said the CFRA analysts. “Indeed, this trend has spurred certain notable mega-deals as some of the major land-based casinos seek to tap into the growing market opportunity, such as the Caesars/William Hill deal or even MGM’s ultimately unsuccessful bid to acquire Entain, its joint venture partner in BetMGM.”
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