With online gambling set to surge on the Super Bowl, here are Wall Street's favorite gaming plays

Published Sat, Feb 6 20218:28 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

Sunday's Super Bowl may feature some familiar faces, but it will mark something of a new era in the sports gambling world. Visitors to Las Vegas are expected to be down due to the pandemic this weekend, while online sports gambling is expected to see a dramatic jump, according to a research note from Bank of America. The expansion of online sports gambling has accelerated over the past year, with new players entering the space and state governments looking for ways to fill revenue shortfalls caused by Covid. That has led industry experts to predict a big day for online sportsbooks for the Super Bowl, but Bank of America says even those experts may be too cautious. "The AGA expects approximately a third of bettors will be placing bets with online sportsbooks, a +63% increase Y/Y. This implies just over 10% of adults with access to online sports betting will be placing bets on the game through online sportsbooks. We will take the over on that," the note said. However, just because online gambling is a growth area in this industry doesn't mean Wall Street analysts think the stocks are all good value from here. According to FactSet, the gaming stocks with the most upside to the average analyst price target from analysts are Las Vegas Sands and Caesars Entertainment — two stocks still very dependent on the traditional travel and casino businesses, which many expect to rebound as vaccines become more widespread. DraftKings and Penn National Gaming , which are two of the stocks with the most exposure to online gaming, are already trading above their consensus price targets for the next 12 months. Both stocks have roughly tripled in price over the past 12 months. There are also signs that the traditional casino business is already bouncing back. A survey from the bank showed that hotel room rates on the Vegas strip for this weekend are down 6% since last year, a significant improvement compared with much of the pandemic. As for which online sportsbook is the winner this weekend, the Apple and Google app stores may hold a clue, according to the note. "During the weekend we will be keeping an eye on app store rankings for different sports betting apps. During the NFC/AFC championship weekend DraftKings and FanDuel were consistently toward the top followed by BetMGM and Barstool Sportsbook and we expect to a similar lineup for this weekend," the note said. Regardless of which company wins the week weekend, it's likely that many if not all will finish in the black. The Nevada sportsbooks have only lost money during one Super Bowl since 2002, with the exception being Eli Manning and the Giants knocking off the undefeated New England Patriots, according to the note.

Tom Brady #12 of the Tampa Bay Buccaneers celebrates after beating the Green Bay Packers 31-26 in the NFC Championship game at Lambeau Field on January 24, 2021 in Green Bay, Wisconsin.

Dylan Buell | Getty Images

Sunday's Super Bowl may feature some familiar faces, but it will mark something of a new era in the sports gambling world.

Visitors to Las Vegas are expected to be down due to the pandemic this weekend, while online sports gambling is expected to see a dramatic jump, according to a research note from Bank of America.