The sports-betting companies threatened most and least by the coronavirus pandemic, according the industry insiders

• The legal sports-betting industry in the US is grinding to a halt, like many other industries, amid the global coronavirus pandemic.
• Business Insider spoke with equity analysts, industry advisors, and investors to learn what businesses within the sector are most at risk.
• Physical sportsbooks will likely be the hardest hit because of their massive retail footprints.
• Daily-fantasy-sports companies like FanDuel and DraftKings may fare better, as they can lean on gaming around other forms of entertainment in the absence of live sports.
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The legal sports-betting industry that was gaining ground in US is grinding to a halt, like many other industries, amid the global coronavirus pandemic.

Major sporting events have been canceled or put on hold. Sportsbooks like FanDuel and DraftKings are leaning on horse racing and international games that are still be played like the Australian A-League, and starting betting pools around anything from political primaries to the game show "Jeopardy."

Business Insider spoke with equity analysts, industry advisors, and investors to learn what businesses within the sector are most at risk.

• Casino companies with physical sportsbooks are most exposed, the industry watchers said. Many of them have been forced to shutter massive retail locations. "They don't have any customers now," said Chris Bevilacqua, cofounder of Bevilacqua Helfant Ventures, an advisory and investment firm for the sports and entertainment industries. "A lot are going to undergo some financial hardship."
  • Indeed, stock in publicly traded casino companies that operate sportsbooks, like Penn National Gaming, MGM Resorts International, and Caesars Entertainment, have collapsed faster than the S&P 500 in the last month. Shares of Penn (which recently bought a stake in Barstool Sports) and MGM Resorts were each down about 75% from a month earlier, at the time of this writing. Caesars stock had fallen 65%.
• Online-gaming companies, including daily-fantasy-sports companies FanDuel and DraftKings, may fare better than the retail operators if people continue to turn to online gaming for at-home entertainment. Both companies have been leaning on their daily-fantasy businesses to weather the rough economic climate, and launching betting pools around topics like politics or TV shows.
  • FanDuel's parent company, Flutter, also owns other businesses, like horse-racing broadcaster TVG, that it can lean on right now. The downside is the company was holding £265 million ($305 million) in debt, as of December. The stock, which is listed on the London Stock Exchange, was down about 40% at the time of this writing.
  • DraftKings was supposed to go public during the first half of the year, but the recent stock-market slide could put a damper on its debut.
• Sports-media companies pushing into betting are at greater risk from the loss of potential advertising revenue in their media business than the loss of gambling revenue. At this point, companies like Fox and theScore are in business of taking bets are not yet generating much revenue from their early efforts in sports betting. Their core media operations are supporting them.
  • Cash-rich companies that have recently raised money are in the best shape right now. "Anybody who's got anything less than a bulletproof balance sheet is going to have an issue," said Nikhil Thadani, equity analyst at Mackie Research. "It's funny that balance sheets don't really matter for growth-focused companies until they do, and then it's the only thing that matters."
  • Sports-media companies hoping to land a deal with a major gaming company are likely out of luck for now. "Up until a week ago I think everybody was pretty bullish about deals that could be done," said one industry advisor, who has advised multiple media companies that are moving into sports betting. "A lot of that is going to be put on hold.

Read more about how the coronavirus outbreak is affecting the sports industry:

• Sports-betting insiders say companies are in 'triage mode,' cutting costs and getting creative to keep fans interested until live sports return: "Eventually sports will come back," one insider said. "But what's the hole going to be that we're digging out of whenever all that happens?"
• US sports-betting companies are planning a resurgence around the NFL season and its delay would be a 'worst case scenario': Insiders are hoping that the fall NFL season, which has been a launchpad for sports-betting products and marketing campaigns over the last two years, will still kick off as planned in September.
• NBA poaches top Spotify marketer to help lead coronavirus recovery efforts and keep the league connected with its fans: Danielle Lee's first job will be to help the league get through the coronavirus crisis after commissioner Adam Silver suspended all games on March 11.
  

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