2025 Earnings Impact: How March Madness and Harsh Weather Affect Sports Betting Giants’ Profits

Key Insights

• Major gaming and sports betting firms such as DraftKings, MGM Resorts International, and Penn Entertainment are preparing to release their Q1 2024 earnings reports.
• March Madness upsets and adverse weather conditions are expected to have notable effects on these companies' financial performances.
• Bank of America projects a $10 million to $20 million earnings impact on DraftKings due to unexpected tournament outcomes.

As the first quarter earnings season approaches, investors are closely watching how the 2024 NCAA Division I men's and women's basketball tournaments, combined with earlier severe weather across parts of the U.S., will influence the results of key players like DraftKings (DKNG), MGM Resorts International (MGM), and Penn Entertainment (PENN).

March Madness remains a pivotal event for sports betting, drawing millions of bettors annually due to its numerous games and bracket challenges. The American Gaming Association estimates that in 2024, American adults will legally wager approximately $2.72 billion on both men's and women's NCAA tournaments, representing about 2.2% of the total industry-wide legal wagers.

The women's tournament, highlighted by South Carolina’s undefeated championship run, broke records with the highest-ever college basketball viewership on ESPN platforms. The thrilling final between South Carolina and Iowa, led by star Caitlin Clark, surpassed men’s championship viewership for the first time, boosting betting activity significantly.

Bank of America analysts note that early-round upsets in March Madness could slightly dent DraftKings’ profits, while Penn Entertainment’s ESPN Bet—launched only in November 2023—is expected to face more pronounced challenges as it strives to increase market share and profitability.

According to Bank of America, "The initial March NCAA tournament weekend brought some unfavorable outcomes, but the financial impact on DraftKings is limited to $10-20 million, which is smaller compared to fluctuations seen during major NFL weekends. For Penn's ESPN Bet, Q1 2024 earnings will largely hinge on March results, with expectations set below predictions due to lower hold rates and increased promotional costs."

JPMorgan analysts highlight that ESPN Bet secured the fourth-largest market share in Maryland in March, trailing behind FanDuel (owned by Flutter Entertainment), DraftKings, and BetMGM, indicating ongoing competition in emerging markets.

For companies like Penn and MGM that operate physical casinos, analysts from Bank of America and JPMorgan caution that early-year severe weather has temporarily impacted foot traffic and revenue. Penn executives reported stable demand overall, with disruptions mainly confined to harsh January weather, followed by recovery.

Additional gaming companies scheduled to announce results later in April and early May include Red Rock Resorts (RRR), Boyd Gaming Corporation (BYD), and Caesars Entertainment (CZR), further illuminating the sector’s performance amid evolving market conditions.

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