How the Sports Gambling and Stock Trading Worlds Collided in 2020
With stimulus checks flowing in and much of the economy shut down this year, millions of Americans have found themselves in an unfamiliar situation – sitting on too much cash with few avenues to spend it. The personal savings rate in the U.S. hit a historic 33.7% in April this year, just as bars, restaurants, malls, sports venues and music events were suspended.
“With the volatility, it is kind of like watching a sports game,” Dave Portnoy, CEO of Barstool Sports, told Bloomberg earlier this year.
The sports betting and casino industry seemed to agree. Casino company Penn National Gaming announced it had bought a stake in Portnoy’s Barstool for $163 million in cash and stock. Penn’s stock has surged 1,500% since March, 2020.
Another factor driving the casino industry’s surge in valuation is the spread of legalization. While gambling and betting on live sports events was always legal in Nevada, legalization in New Jersey in 2018 opened the floodgates for other states to follow. Now, over 18 states plus DC allow some form of sports betting and 22 states have introduced similar bills that could pass in the near future.
The growing popularity of online sports betting is driving the stocks of Penn National and DraftKings higher. The Stars Group acquired online betting startup Flutter Entertainment, while Golden Nugget and Scientific Games have seen a surge in online gaming revenue this year as well. Meanwhile, private investors have been boosting their stake in stock betting platforms such as Robinhood. It’s been a good year for traders and gamblers.