Stifel's April U.S. online gambling tracker, released Wednesday, highlights a cooling in handle growth across the U.S. sports betting market and underscores ongoing headwinds for the sector.
According to the tracker, U.S. sports betting handle growth moved into negative territory after showing modest sequential improvement in February. Stifel attributed the reversal primarily to tougher year-over-year comparisons. Despite the overall slowdown, the report notes an improvement in New York's handle growth over the trailing three weeks.
iCasino performance stood out differently. Stifel found that iCasino gross gaming revenue growth remained below earlier trends but continued to perform at healthy levels and stayed aligned with guidance provided by companies in the space.
The tracker also examined operator-level dynamics. FanDuel's handle share loss narrowed in March, a development Stifel said was in part a result of promotional activity. Separately, Kalshi's trading volumes continued to run higher than volumes in regulated online sports betting, and parlay penetration rose month-over-month.
The report summarized recent legal developments for Kalshi as mixed. While individual court outcomes varied, Stifel characterized the aggregate tilt of rulings as favoring state positions. On the promotional front, the firm observed tier-2 online sports betting operators demonstrating more rational promotional reinvestment behavior. At the same time, forecasts of rising user acquisition spending are starting to push up expectations for regulated online sports betting customer acquisition costs.
On the equities side, Stifel left its recommendations unchanged. The firm maintained buy ratings for Sportradar (NYSE:SRAD) with a $13.43 price target, Flutter (NYSE:FLUT) with a $103.33 price target, and DraftKings (NASDAQ:DKNG) with a $24.17 price target.
Stifel stated it sees a more tangible route to expansion in prediction markets and an improvement in sentiment for Sportradar, and the firm judged that the risk to unregulated revenue for the company is overstated following recent short reports.
Key takeaways:
- Sports betting handle growth turned negative year-over-year after modest sequential gains in February, with New York showing recent improvement.
- iCasino gross gaming revenue growth remains healthy and consistent with company guidance despite trailing earlier trends.
- Stifel upheld buy ratings on Sportradar, Flutter and DraftKings and noted a clearer path for Sportradar's prediction market opportunity.
Market and sector impact: These trends affect gaming operators, exchanges and regulated sports betting platforms, with potential implications for marketing spend, revenue mix, and investor sentiment in gaming and leisure stocks.
Risks and uncertainties highlighted in the report:
- Year-over-year comparisons can produce volatile handle growth readings, creating uncertainty for revenue forecasts in the sports betting sector.
- Legal developments around prediction market operator Kalshi remain mixed and tilt toward state positions overall, introducing regulatory risk for market participants.
- Rising expectations for user acquisition spending could increase customer acquisition costs in the regulated online sports betting market, pressuring margins for operators and impacting marketing budgets.