Weak Q1 Betting Results Hindered iGaming’s Contributions, JMP Says

JMP Securities analysts say that iGaming in the United States remains on the rise. The online casino industry’s successes, however, were offset by the suboptimal performance of the US sportsbooks, the financial services company added.

As reported by Next.io, JMP Securities’ experts recorded strong trends in betting handle during the first quarter of the year. January’s margins, for example, were close to setting a new record, analysts pointed out.

Unfortunately, the industry was later impacted by the underperformance of the sports betting sector, which struggled to keep up in March. While many companies published their Q1 and FY 2024 guidance before that, JMP’s analysts believe that January’s strong results and March’s weaker figures will even out into a “slightly unfavorable” sports betting impact.

In the meantime, JMP remains optimistic about the future of the online casino sector. In jurisdictions where the vertical is permitted, companies should be able to offset the negative impact of the weak sports betting figures the experts say.

While the iGaming revenue figures are promising, online casino legislative efforts remain bleak. In line with that, JMP updated its estimates to reflect fewer states going digital than previously expected.

JMP Securities also shared its expectations about the next two quarters, saying that it expects betting handle to grow in April, reflecting the conclusion of March Madness and the beginning of the NBA and NHL playoffs. Additionally, JMP’s analysts expect gaming operators to highlight improvements to gaming margins in Q2 and Q3, underpinned by tech and product improvements.

JMP also projected sports betting and iGaming to continue growing at a rate of 14% and 17% a year respectively between 2023 and 2028.

DraftKings Lost Some of Its Market Share in Q1, JMP Believes

JMP’s analysts had previously said that they expect the American gaming giant DraftKings to lose handle and GGR market share in Q1. According to them, the company’s favorable performance during the Super Bowl season was offset by suboptimal sports betting performances during March Madness.

JMP expected DraftKings’ sports betting results for Q1 to be slightly below company expectations. However, the former firm was convinced that the operator’s iGaming business will post a strong performance.

JMP furthermore predicted that DraftKings will now focus on delivering growth from its existing users. In addition to continuing the integration of Jackpocket, the company might be interested in M&A within the in-game technology space, experts suggested.

In any case, JMP believed that FanDuel was the winner in terms of market share for Q1.