5 Best Betting Stocks to Buy in December 2022 (updated)

Betting stocks are an attractive investment opportunity for risk-tolerant investors. Several betting companies have listed over the last year and there are several sports betting stocks that you can invest in.

Most of these stocks have come off their 2021 highs. Here are the five best sports betting stocks that you can now buy in December 2022.

1. DraftKings (NYSE: DKNG)

DraftKings runs a sports betting business and went public last year in a three-way SPAC (special purpose acquisition company) merger. The Spinning Eagle Acquisition Corp was the SPAC sponsor while the third partner was SBTech, a Bulgaria-based gaming technology company. The company is among the most popular betting stocks.

Short-seller Hindenburg Research had accused the company of fraud. Hindenburg had accused several other companies including Lordstown Motors, Nikola, and Clover Health. All the stocks tumbled after the allegations and there were top management changes in Nikola and Lordstown after the report.

DraftKings was looking to acquire gambling group Entain for $22 billion. However, the company has now dropped the plans. “After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” said DraftKings CEO Jason Robins.

Wall Street finds DKNG a good betting stock to buy

Meanwhile, DNKG stock has tumbled sharply from the peaks and is underperforming the markets in 2021. However, Wall Street analysts are bullish on the stock and it has 18 buys, nine hold, and one sell rating. Its median target price of $73 is a premium of over 52%. DKNG stock trades at an NTM (next-12 months) EV-to-sales multiple of 12.4x which is below the 20.4x that the multiple has averaged since the company went public.

While the valuation multiples look reasonable on a relative basis, the stock is looking bearish on the charts after the massive fall. It has been facing strong resistance at the 100-day SMA (simple moving average) and also trades below the 50-day and 200-day SMA. However, if you are looking at a betting stock to hold for the long-term, DKNG stock looks like a good bet.

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2. Esports Entertainment (NYSE: GMBL)

Esports Entertainment is another betting stock that should be on your radar in October 2021. The stock has fallen 77% from its 52-week high and is now trading just above $5. If the stock plunges below $5, it would get classified as a penny stock, which in general are riskier to invest. Meanwhile, if you are willing to take the extra risk, GMBL could be a multibagger betting stock.

Analysts see GMBL as among the best betting stock

GMBL has a median target price of $17 which is a premium of 216% over current prices. Based on upside potential, GMBL would look among the best betting stocks. That said, analyst target prices should not be the sole reason for choosing a stock as many times analysts’ price action lags the stock’s price movement.

GMBL has been growing fast through a mix of organic and inorganic growth. The company reported revenues of $16.8 million in the fiscal year 2021 and said that expects to post revenues between $100-$105 million in the fiscal year 2022. The company has a market cap of only about $118 million. This means that the stock trades at a little above 1x its expected fiscal year 2022 sales, which makes GMBL probably the cheapest betting stock to buy.

GMBL is a fast-growing company but the price action seems at odds with the earnings and valuations. It looks among the best betting stocks to buy in October after the massive crash.

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3. Flutter Entertainment (OTC: PDYPY)

In terms of market cap, Flutter Entertainment is just behind DraftKings. It’s a large betting company and serves over 14 million customers worldwide. The stock has sagged in 2021, like most other betting stocks, and is down 7.2% for the year. However, its drawdown from the 52-week peaks is much lower than DKNG and GMBL.

Flutter has several betting brands as part of the portfolio

The company has several brands as part of the portfolio including FanDuel, which is the biggest competitor to DraftKings. Its other brands include Betfair, FanDuel, FOX Bet, TVG, and PokerStars. It also owns Airton Risk Management which offers financial security to companies that have exposure to on-field sporting performance

Flutter stock trades an NTM EV-to-sales multiple of 4.4x which looks reasonable looking at the peers. Analysts expect the company’s sales to rise 12.8% in 2021 and 11% in 2022 in US-dollar terms. While most of the betting stocks are loss-making companies, Flutter Entertainment is profitable and posted a group adjusted EBITDA of £597 million in the first half of 2021.

While betting stocks are notorious for their volatility, Flutter Entertainment is relatively less volatile. If you want exposure to the betting industry with somewhat less volatility, Flutter Entertainment should definitely be on your watchlist. A report by Fairbettingsites.co.uk into the most profitable brands of 2022 speculates that FanDuel will grow further in 2023 due to the regulation of gambling in Ohio.

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4. Paysafe (PSFE)

When thinking about betting stocks, payment processing company Paysafe, that listed earlier this year with a SPAC sponsored by Bill Foley, would not probably come to your mind. However, betting sites also need to partner with payment processing companies in order to process customer payments. Here is where Paysafe comes into the picture.

The company has a strong market-leading position in the US iGaming market. The online betting industry in the US could multi-fold as more states legalize betting. While it is still not allowed at the federal level, eventually we could see the US also legalize online betting.

PSFE is an ancillary betting stock

PSFE is an ancillary betting stock. As the iGaming market expands in the US, the company’s revenue opportunity would also increase. From a valuation perspective also, PSFE stock looks attractive and trades at an NTM EV-to-EBITDA multiple of under 14x. The valuations look attractive even as the company is not growing as fast as other fintech companies.

Wall Street analysts are also reasonably bullish on the stock and its average target price of $13 is a premium of 76% over current prices. Earlier this week, Credit Suisse downgraded the stock from a buy to neutral and lowered the target price from $13 to $9. Credit Suisse analyst Timothy Chiodo pointed to “unexpected shedding” of direct marketing merchants and “substantially lower-than-expected” digital wallet volume as among the reasons for the downgrade.

That said, the stock looks too cheap to ignore at these prices. Apart from iGaming, PSFE also gives exposure to the fast-growing payment processing industry. If you are looking at an ancillary betting stock to play the US iGaming market, PSFE would fit the bill.

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5. Roundhill Sports Betting & iGaming ETF (NYSE: BETZ)

If you want diversified exposure to the betting industry instead of buying individual stocks, you can consider BETZ ETF. The ETF is up 18% for the year and is down only about 8.5% from the 52-week highs. While some of the individual stocks have tumbled sharply, BETZ hasn’t fallen much from the peaks, thanks to the diversified portfolio. In general, ETFs are a good investment option for investors who are not comfortable picking individual stocks, whether due to lack of time or expertise.

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