Sports Betting Stocks Rally After States Back Legalization

Companies that offer online sports gambling rallied Wednesday morning after a trio of states voted in favor of ballot measures aimed at legalizing sports betting and other gaming expansion.

DraftKings Inc. rallied as much as 6.2%, the most in three weeks. The gains were spread across the industry, withPenn National Gaming Inc. rising 6.1%.Flutter Entertainment Plc the owner of FanDuel, is on track for a record close in London after rising as much as 2.5%. The Roundhill Sports Betting & iGaming ETF, commonly-known by its ticker BETZ, rose 1.8% after posting its best day in more than a month on Tuesday.

Maryland voted to legalize sports and event betting atcertain facilities, while South Dakota backed a proposition that would allow legal sportsbooks in the region that’s home to its casinos as early asnext year. Louisianaapproved a proposition that cleared a hurdle to allow sports betting. The trifecta of wins added to investor optimism in the growing industry’s potential to rake in billions more in revenue.

Regulations will still need to be finalized, but the developments across the three states will open up a roughly $537 million market, according to Morgan Stanley. “While the referenda outcomes were expected, they support the argument that there is positive legislative momentum, which should be enhanced in early 2021 when most legislatures go back into session,” analyst Thomas Allen wrote.

— With assistance by Janet Freund

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