The Update Issue: The Bettors and Brands That Won and Lost the Super Bowl

Earlier this month, I wrote about the expensive land grab happening in New York state after online sports betting became legal this year... The New York market is large... but will be difficult to make money in, given that the state imposes the highest corporate tax rate in the country on online wagers. While it […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] The Update Issue: The Bettors and Brands That Won and Lost the Super Bowl By Berna Barshay Earlier this month, I wrote about [the expensive land grab happening in New York state after online sports betting became legal this year](... The New York market is large... but will be difficult to make money in, given that the state imposes the highest corporate tax rate in the country on online wagers. While it will take time for that market to shake out and for investors to get a sense of whether it will be profitable, New York remains just one piece of an exploding U.S. sports betting market. Barron's took a look at the industry's growth in its cover story last weekend... Legal sports gambling has now spread to 30 states and Washington, D.C. – home to more than 130 million. In the four years that it has been legal, both the amount of money bet on sports and the amount counted as revenue by gambling companies have risen nearly 1,000%, to $57 billion and $4.3 billion, respectively, according to the American Gaming Association, or AGA. In New Jersey, which led the way in allowing sports betting, $10.9 billion was wagered in 2021. That's $1,200 for every man, woman, and child in the state. Wagers on last Sunday's Super Bowl were expected to grow 78% year over year to $7.6 billion. Barron's also noted the incredible amount of marketing dollars being thrown at potential bettors... Gambling companies spent $725 million on television ads in 2021, three times as much as on cereal ads, according to Nielsen. Such levels of spending, in addition to giveaways to bettors, mean that these companies could report losses for years, until consolidation winnows the field and a few winners emerge. While market share consolidation is certainly the end game here, it's important to note that three companies – DraftKings (DKNG), Flutter Entertainment's (FLTR.L) FanDuel, and Caesars Entertainment (CZR) – already collectively have about 80% combined market share. Further industry growth will help these operations get to profitability... and that growth should be robust. Take a look at this Morgan Stanley (MS) forecast for industry growth...  Source: Barron's But the biggest windfalls would come with legislation at the federal level, which would allow interstate operations. Right now, with state-by-state regulation, each state requires its own infrastructure. Barron's dedicated about half its article to the unknown societal risks of such rapid industry growth... Concerns about people getting in over their heads seem especially valid at a time when all forms of speculation have been so rampant in the financial markets. There are already some alarm signals... A survey taken last year on behalf of the National Council on Problem Gambling, which hasn't yet been released publicly, found that the percentage of people needing to borrow money to pay bills or debts because of gambling has tripled since 2018. Sports bettors, the council found, are at least twice as likely to develop problems as the average gambler. Online sports betting is way more established in Europe, and Barron's notes... In the United Kingdom, a government report said that problem gambling has been lucrative for the industry, finding that "60% of its profits come from the 5% who are already problem gamblers, or are at risk of becoming so." While the proliferation of legalized online gambling clearly poses a risk to those who can't keep their spending on it in check, it feels like there's no putting this toothpaste back in the tube... The floodgates have opened, for better or worse. Sports betting may serve up some individual tragedies, but with New York state taking in $58 million in incremental tax revenue from sports betting in just its first month... the industry is far too lucrative for most states to turn their back on. --------------------------------------------------------------- Recommended Links: [Hedge fund legend calls 'The End of Real Estate']( Few people see what's coming. But Whitney Tilson is predicting the end of real estate. And it's already starting. [Tilson reveals everything right here](. --------------------------------------------------------------- [80% CRASH coming?]( The analyst behind 24 different triple-digit winners just gave what he calls the most important interview of his life. He thinks the market could be on the verge of an 80% collapse. He lays out all the proof... plus a detailed plan for exactly what to do. (Hint: It doesn't require shorting, options, or "timing the market.") [You must see this interview today](. --------------------------------------------------------------- Speaking of lucrative – after throwing considerable marketing dollars at prompting wagers on the big game, it looks like gaming operators themselves got lucky... The Los Angeles Rams weren't the only winner at Sunday's Super Bowl. Their narrow 3-point victory over the Cincinnati Bengals was likely a big win for DraftKings, FanDuel, Caesars, and other gaming operators... Going into the game, the Rams were favored to win, and the point spread was 4.5 points. The Rams won... but only by three points. Additionally, the final score total of the 23-20 game was 43, under the 48.5 total points predicted. Missing the mark on the points spread and the total score saved sportsbooks from having to pay out to gamblers who chose the winning Rams for bets that required them to beat the spread or for the total points to come in over the line. This is an unusual result... The Las Vegas Review Journal noted this was the first time in 13 years that the winner didn't cover the spread. The night's biggest loser? Jim McIngvale, aka "Mattress Mack." The owner of the Texas-based Gallery Furniture retail chain bet $9.5 million on the Bengals to win. Twitter tells me that Mattress Mack is on a bit of a cold streak...  Source: Twitter/@ActionNetworkHQ Perhaps it's time he finds a new hobby... Market research firm Morning Consult did a survey to take stock of the big game's big advertising winners, and one of the results surprised me... Morning Consult asked 837 U.S. adults to rank the Super Bowl ads on a scale of 0 to 6 to determine the "Most Loved" Super Bowl ads. The firm had previously done a survey asking Americans to identify the companies with the best Super Bowl ads historically. Anheuser Busch InBev's (BUD) Budweiser and PepsiCo's (PEP) Doritos took the top spots historically... and in the ranking of this year's ads as well. Flamin' Hot Doritos and Cheetos took the top place in this year's rankings, with [a spot featuring forest animals jamming out to Salt-N-Pepa's "Push It" while munching](. Bud came in the runner-up with a nostalgic ad featuring one of the brand's [beloved Clydesdale horses recovering from an injury with the help of a dog friend](. Third place went to [Kia's (000270.KS) electric car ad featuring a cute "Robo Dog" and the '80s hit "Total Eclipse of the Heart."]( The big surprise for me was that Pringles' totally creepy clip with the guy who goes through life – and eventually a funeral – with a chip can stuck on his arm placed fourth out of 57 ads. I thought the ad – scored to Lionel Ritchie's hit "Stuck on You"– was cringeworthy... If you really want to subject yourself to this again, [click here]( Among the lowest scoring ads... medical diagnostics company [Hologic's (HOLX) clip featuring halftime performer Mary J. Blige going to the doctor](... [crypto trading app FTX's ad featuring Curb Your Enthusiasm actor Larry David as a cryptocurrency naysayer](... and [Cue Health's (HLTH) spot showcasing its at-home device for COVID-19 testing](. What a shock that COVID tests and mammograms are a buzzkill next to chips, beer, and electric cars! My takeaway from the rankings is that people love animals... and songs from 1983! In the mailbag, a reaction to last week's piece on activists at retailer Kohl's (KSS) and two 100-year stock picks... Did you bet on the Super Bowl? Have you tried online sports betting? Are you worried about online gambling having negative societal effects? Did you agree with the survey's ad rankings? Did you find that Pringles advert creepy like I did? Share your thoughts in an e-mail by clicking [here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Berna). I'll be off from writing next week as I attend a virtual conference... I'll be back on February 28, so stay tuned for some guest essays while I'm out. "Retiree here. We shop at Kohl's. But haven't been there since the pandemic hit. Now that we are vaccinated and boosted, and cases are falling, we are talking about going to our local store any day now. And my wife loves Sephora. When she finds out it is there, I'm doomed. We haven't bought any clothes for two years. All of a sudden, she is talking about something in a sales catalog. "I've bought all my pants and golf shirts at Kohls. It's time to go shopping. I would hate to see them 'bought.' That doesn't seem to mean better anything. Based on experience with Sears and Penney's slow slip into oblivion. It doesn't take much to turn off my wife." – Geo P. Berna comment: Geo, I agree... private equity ownership is almost always a negative for shoppers. They tend to starve stores of investment and just pull out as much cash as they can. Not great for long-term survival... but the money folks can usually strip mine these chains for a good financial return. "Hey, Berna! My 100-year stock pick is Berkshire Hathaway (BRK-B) – it's not likely to go to zero, and the companies [it invests in] are very diversified. Maybe one day I'll have enough assets to hold BRK.A – a gal can dream, anyway. Enjoy your newsletter. Thanks for all that y'all do!" – Kathy P. Berna comment: Kathy, I bet my colleague Whitney would agree with this choice! "Waste Management (WM) for the 100-year portfolio. Their business will evolve but we will need to deal with everything we are going to eat and drink in your portfolio 😀 " – Jimmy M. Berna comment: Jimmy, interesting pick... You're correct that the packaging from our food, beverage, and other needs will have to go somewhere. The garbage business never seems to go out of style! Regards, Berna Barshay February 17, 2022 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 601 Lexington Ave., 20th Floor, New York, NY 10022 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](