Igaming will outperform this year, Macquarie analyst says
Igaming stocks are rising three times as fast as the S&P Index. That was one of the salient findings of Macquarie Equity Research analyst Chad Beynon in an investor note released 26 June.
Stocks of igaming companies had risen 12% in the past four weeks, wrote Beynon, while the S&P 500 was up 4%. He felt that this showed that the “market outlook is getting better in the face of regulatory headwinds.”
Beynon noted that the ascent in share prices coincided with a period of considerable hold percentages among sports betting operators, especially during June. In the first two weeks of the month, hold was trending toward 13%, Macquarie reported.
From these figures, Beynon extrapolated a second-quarter hold percentage of 11%. Operators seeing record rates were expected to include FanDuel – and publicly traded parent Flutter Entertainment – and DraftKings. Other beneficiaries were thought to be Rush Street Interactive, BetMGM and Caesars Entertainment.
“As such, we expect most B2C Online segments to outperform,” wrote Beynon. He added that SportRadar might also exceed expectations, because of heavy NBA exposure during the league playoffs and because of revenue-sharing agreements in the United States.
Handle growth had also sped up, from 11% in the first quarter of 2025 to 15% in the second. That was outdone by a 30% vault in igaming activity in the second quarter.
Beynon opined that this acceleration would partially ameliorate cash-flow reductions caused by oncoming tax hikes in Illinois and New Jersey. The December launch of sports betting in Missouri also was expected to pressure cash flows.
Tax increases were, Beynon wrote, at the forefront of consciousness. He cited Illinois’ inception of a handle tax, as well as a probable hike in New Jersey to 19.75%. Maryland’s sports betting tax had gone from 15% to 20%, and Louisiana’s from 15% to 21.5%. Beynon, incidentally, did not think the Garden State would stop short of 20% taxation, possibly going as high as 22%.
“Despite tax headwinds, we think the outlook for 2025 GGR has gotten better in recent months,” the analyst allowed. He predicted that online gross gaming revenue would grow 25% in 2025. “Longer term, we think higher structural hold, a faster shift to in-play betting, and new state legalization for OSB and igaming will continue to push the online [market sizes] above investor expectations,” he added.
Citing DraftKings’ US-only business exposure and “dominant market position,” Beynon named it one of his top picks in the online sector, with more upside to come as it expands overseas. “We prefer RSI as a smaller-cap company,” he continued, “with lower relative exposure to sports hold, niche igaming following in key markets, and diversified global presence” in Canada, and in Central and South America.
Lastly, Beynon singled out Flutter and FanDuel. He called Flutter “unrivaled when it comes to diversified global growth, underpinned by best-in-class products/hold and proven M&A strategy.”
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David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
