The return of big sporting events this summer has fans cheering. Yet sports betting stocks have barely responded to the apparent bonanza. Shares in DraftKings and FanDuel-owner Flutter Entertainment, the two leading US sports gambling sites, are down about a quarter since March. Penn National Gaming, the casino operator that recently entered the online gaming market, has fallen by an even steeper 44 per cent.

Declines were overdue. US sports betting stocks have skyrocketed despite the dearth of live sports last year. DraftKings has quintupled in value since it went public through a three-way Spac merger 16 months ago. At its peak this year, the betting site traded at 25 times estimated revenue, well above the ratios for Ladbrokes owner Entain or French lottery operator La Francaise des Jeux.

Having a captive audience with cash to spare helped. In place of European football or baseball championships, US gambling sites offered bets on outcomes for everything from Russian table tennis to darts tournaments. The strategy helped DraftKings nearly double sales to $614m last year.

The good times should continue given live sports matches have resumed. In New Jersey, the biggest market for sports betting outside Nevada, the state’s sportsbooks took in $814m in handle (total bets) in May, compared with $118m a year ago, when most events were cancelled and casinos shut.

DraftKings itself expects revenue for the current year to nearly double again to as much as $1.15bn. But that top-line growth does not come cheap. Competition for US sports-gambling customers is fierce. Companies spend heavily on marketing and free bet promotions to grab market share. At DraftKings, losses swelled to $844m from $142m last year despite the surge in revenue.

Sports betting in the US may have exploded since the Supreme Court began allowing such wagers outside of Nevada in 2018. But with operators offering no clear path to profitability, stock market punters are right to cash in some of their chips.

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