The PointsBet Holdings Ltd (ASX: PBH) share price has edged marginally higher today after its US rivals, DraftKings Inc (NASDAQ: DKNG), announced an upgrade to the projected size of the US sports betting market.
What did Draftkings announce?
DraftKings held its virtual investor day presentation last night, where the company raised its long-term financial targets and upgraded its forecasts for the US sports betting market. The company cited positive legalisation trends to arrive at a new US$67 billion projection for the sports betting industry. It also noted that domestic online sports wagering alone could be worth US$22 billion or more, assuming all states legalise sports betting. The company did acknowledge that full legalisation could be ambitious because getting anti-gambling states such as Hawaii and Utah is likely to be difficult.
This compares to commentary from PointsBet back in August 2020, which cites Morgan Stanley and JP Morgan estimating the US iGaming and Sports betting sector to be worth a combined US$12 billion by 2025.
Another interesting point from its investor day was its commentary around Canada. Canada recently approved single-game sports betting and is estimated to be a $5 billion to $8 billion sports betting opportunity.
Why this could be good for the PointsBet share price
Despite being competitors and fighting each other for market share, DraftKings' positive commentary regarding broader market conditions is likely to be good news for the PointsBet share price.
PointsBet is currently operational in 5 US states including New Jersey, Illinois, Indiana, Iowa and Colorado. The company has also made plans to enter the iGaming sector with an in-house platform in the works for an inaugural launch in Michigan in 2H FY21, followed by New Jersey.
In its half-year results presentation, Pointsbet hinted at the potential opportunity to launch New York, a state with one of the largest estimated sports betting revenues, and Canada.
Why the PointsBet share price is slumping this month
The PointsBet share price has slumped more than 20% in the last month. This brings its year-to-date returns to just 8% compared to its peak year-to-rate returns of almost 50%.
PointsBet might have been caught in the recent tech and growth driven selloff due to rising bond yields. This has seen many leading ASX 200 shares, such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), become some of the worst-performing shares this month.
