This year’s March Madness is coming to a close, and what a season it’s been. Bizarre upsets and the strangest Final Four in years produced a series unlike any other in recent memory. And it’s got betting stocks on watch all throughout the spectrum as stocks from DraftKings (NASDAQ:DKNG) to Wynn Resorts (NASDAQ:WYNN), from Caesars Entertainment (NASDAQ:CZR) to Penn National (NASDAQ:PENN) to even Fubo (NYSE:FUBO) all find themselves under scrutiny.
Even out of the gate, most knew this was going to be one serious betting season. MacQuarie analyst Chad Beynon figures that this year’s tournament will produce a combined total of $4.5 billion in action for sportsbook and betting operations. Further, Beynon and his team calculated the house’s edge, noting an above-average overall hold rate. Said hold rate hit 8% after a bizarre and largely unexpected series of unlikely wins hit. Perhaps the largest destabilizing event was the Florida Atlantic versus Kansas State game that ended with Kansas State knocked flatter than most of the state for which it’s named.
However, Beynon noted a potential downside to this action: a lack of major names in the Final Four. With San Diego taking on Florida Atlantic and Miami tackling UConn, the bouts will be odd indeed. But this, coupled with large customer acquisitions, suggests that the Final Four may trigger some losses, but turn around as we go into the baseball season, then football season, and back around to basketball around the end of 2023.
The betting market is odd, and impacts are felt all up and down the line. The five stocks mentioned earlier demonstrate this point well. Only Caesars stock is considered a Strong Buy by analyst consensus of the five. The rest are Moderate Buys. Yet, Caesars only has the second-strongest upside potential at 53.44%, thanks to its average price target of $71.64. The strongest upside comes from recently-rebranded Fubo, whose $3.26 average price target gives it 209% upside potential.
