Goldman Sachs predicts that iGaming and sports betting growth will outpace e-commerce.
Goldman Sachs highlights domestic online casinos and sports wagering markets as major consumer-related growth stories, poised for significant compound annual growth rates (CAGR) over the next decade.
Goldman Sachs expects US online sports betting and iGaming markets, currently valued at $900 million to $1.5 billion, to grow significantly to $39 billion and $14 billion, respectively, by 2033. This projection reflects compound annual growth rates (CAGRs) of 40% and 27% over more than a decade, driven by favorable legislative trends and increasing consumer adoption.
Goldman’s forecast for the sports wagering market exceeds many other research firms’ estimates and surpasses DraftKings’ recent projection of a $22 billion market size assuming full legalization.
Putting Growth Into Context
Goldman Sachs highlights that gaming companies, traditionally classified in the consumer discretionary sector, are particularly noteworthy for investors and operators. They emphasize that the projected compound annual growth rates (CAGRs) of 40% for online sports wagering and 27% for internet casinos far exceed the expected 18% CAGR for e-commerce (excluding online travel bookings) over the next decade. In comparison, no online retail sector is forecasted to grow at a CAGR above 22% during this period.
The appeal of sports wagering and iGaming lies in their minimal capital requirements compared to brick-and-mortar establishments, as they lack physical distribution centers. This results in potentially higher returns on invested capital and more moderate decremental margins, according to Goldman Sachs.
Specific Names Goldman Likes
Goldman Sachs has raised its price targets on four key stocks in the iGaming and sports wagering sector: Caesars Entertainment (NASDAQ: CZR), DraftKings (NASDAQ: DKNG), Penn National Gaming (NASDAQ: PENN), and Rush Street Interactive (NYSE: RSI).
This bullish move follows the inclusion of Caesars and Penn in the S&P 500, making them the fourth and fifth gaming companies to join this benchmark index. Goldman also emphasized the social dynamics of sports betting, highlighting its network effects and the value of media integration within the industry.
Goldman’s analysts are particularly favorable towards gaming stocks with strong media exposure, such as Penn National Gaming through its stake in Barstool Sports. They have increased their price target for Penn National Gaming to $153, up from $139 previously.
7.BET is the world’s leading independent online gaming authority, providing trusted online casino news, guides, reviews and information since 2012.
Quick Links
© All Rights Reserved.