Morgan Stanley Predicts a Wave Of M&A Deals in the US Gambling Sector

Morgan Stanley, the financial conglomerate, predicts that the US gambling sector is ripe for a wave of mergers and acquisitions (M&A), according to Casino.org.

The report, which was prepared for Morgan Stanley’s clients, reveals that the revenues of the world’s top five bookmakers have more than quadrupled in seven years, thanks to their aggressive M&A strategies.

The analysts point out that Flutter, the parent company of FanDuel, is expected to generate more revenue in 2023 than the world’s top five bookmakers combined in 2015.

These processes are partly due to the growth of the betting market, but also to mergers and acquisitions aimed at diversifying profits and achieving financial advantages in the face of rising tax and regulatory barriers.

“We expect regulatory drivers for consolidation to endure”, concludes Morgan Stanley.

The US could be the hotspot for M&A activity, as Australian firm PointsBet recently confirmed that it is in talks to sell its US arm. Another smaller operator, Rush Street Interactive, could also be a target for bigger players.

With three companies (FanDuel, DraftKings and BetMGM) dominating more than 75% of the US online sports betting market, smaller rivals may have to join forces with larger ones to survive.

According to Morgan Stanley experts, these processes could negatively impact data providers such as Genius Sports and Sportradar. It is expected that in the event of a decrease in the number of players in the betting market, large bookmakers will gain additional bargaining power in negotiations with data providers, limiting their ability to set prices.

Previously, Morgan Stanley predicted a rise in Macau gaming concessionaire profits in 2023. It’s worth noting that analysts’ predictions are already materializing.