(Bloomberg) — Call it the DraftKings Inc. effect. Since the sports-betting operator announced plans to go public last December, its shares have soared nearly sixfold. Though the company loses money and had revenue of just $430 million or so last year, the business boasts a market value of $20 billion.

Loading...

Load Error

Everyone in gambling has eyed that run-up and pondered how to get in on the action, especially Tom Reeg, the canny chief executive officer of Caesars Entertainment Inc. In July, he suggested combining his online business with the U.S. sports-betting operations of William Hill Plc. Now, under pressure from Apollo Global Management, he’s offering $3.7 billion (2.9 billion pounds) for all of William Hill.

What’s behind all this is the explosion in sports betting since the U.S. Supreme Court ruled in 2018 that states outside of Nevada could legalize such wagering if they choose. Now, 22 states and the District of Columbia allow sports betting. Revenue could rise eightfold to $8.4 billion annually by 2024, according to Vixio GamblingCompliance, a research firm.

While the legalization of sports triggered the excitement, the real prize is other forms on online wagering.

In New Jersey, the largest state to offer online sports and casino wagering, sportsbook operators learned they can quickly capture a big share of other online bets. The market leaders in the state are DraftKings and FanDuel, a division of Irish bookmaker Flutter Entertainment Plc.

Online gamblers bet more and play more, Golden Nugget said in a presentation earlier this year. Since the profit from slot machines is more predictable than football wagers, online casino betting is viewed as a lucrative new business opportunity. Both are expected to grow as more states, which have seen their tax revenue crimped by the coronavirus, look to increase revenue by legalizing more