Canada moves to legalize online sports betting — here’s how you can profit from the growing industry

Place your bets, online gambling and sports betting stocks are booming and investors are doubling down on further growth.

On Nov. 26, online sports betting received another regulatory win — the Canadian federal government introduced a bill that would legalize single-events sports betting.

Wherever the US goes, Canada follows

The Canadian bill follows the US Supreme Court’s decision in 2018 to give individual states the option to legalize online-sports betting — setting off a rush to capitalize on opportunities.

Since then, 20 states have legalized or passed a bill to begin the process. According to a gaming industry firm, Eilers & Krejcik, 37 states in the US will have legal betting by the end of 2023.

Despite a year where nearly all major sports leagues were suspended, stocks of online betting companies like DraftKings ($DKNG) have risen more than 3x since going public in Apr. 2020.

• Continued legalization of online sports betting increased the number of users on sports betting apps — 5 US states began online betting operations in 2020.
• The start of major sports (NFL, NBA), after being suspended for several months during the pandemic, pushed the number of payers on DraftKings by 64% in the third quarter of 2020.

How big is the pot?

Investors are betting big that the US online sports betting industry will become a massive industry — just how big?

• According to The American Gaming Association, Americans illegally bet over $150b annually on sports with just $5b placed legally.
• Morgan Stanley expects the industry to grow from $833m to $8b by 2025 — with a high range of $15b if legalized in all states.

For investors… Look for the dark horses

In a Business Insider interview with Paul Martino, an early investor in FanDuel, Martino recommends investing in opportunities at the “fringe of the industry” — those that are cheaper with less attention.

An area of opportunity is the technology that supports the sports betting industry — e.g. GameAccount Network ($GAN).

More opportunities: with investor interest high and the market hot, several online sports betting companies are going publics via SPACs:

• Golden Nugget Online, who operates online casinos, is going public via SPAC, Lancadia Holdings ($LCA)
• Rush Street, one of the largest online betting companies, is going public via SPAC, dMY Technology Group ($DMYT)

(Learn more: What is a SPAC?)