A booming new betting market in the United States is creating a bigger investment opportunity than first expected, according to Citigroup.
The rise in American sports betting follows new legislation that is opening up legal online sports betting.
US revenues are exceeding Citi’s expectations, analysts at the US bank highlighted in a note, with a long-term US$9.3bn a year earnings opportunity that is double the prior predictions from two years ago.
With a medium-term EBITDA margin of around 30% for the US betting firms, Citi said it is “increasingly bullish” on the outlook for stocks with exposure to the American market.
It expects the dominance of FTSE 100-listed pair of Flutter Entertainment PLC (LSE:FLTR) and Entain PLC (LSE:ENT) to continue, while Sweden's Evolution Gaming Group’s product quality will further drive its strong US positioning, the broker said in a note published on Tuesday.
In the note Citi upgraded Flutter to ‘buy’ from ‘sell’, whilst Evolution moves to ‘buy’ from ‘neutral’, and Entain was retained on its existing bullish ‘buy’ rating.