Place your bets, online gambling and sports betting stocks are booming and investors are doubling down on further growth.

On Nov. 26, online sports betting received another regulatory win — the Canadian federal government introduced a bill that would legalize single-events sports betting.

Wherever the US goes, Canada follows

The Canadian bill follows the US Supreme Court’s decision in 2018 to give individual states the option to legalize online-sports betting — setting off a rush to capitalize on opportunities.

Since then, 20 states have legalized or passed a bill to begin the process. According to a gaming industry firm, Eilers & Krejcik, 37 states in the US will have legal betting by the end of 2023.

Despite a year where nearly all major sports leagues were suspended, stocks of online betting companies like DraftKingsDKNG

 have risen more than 3x since going public in Apr. 2020.

• Continued legalization of online sports betting increased the number of users on sports betting apps — 5 US states began online betting operations in 2020.
• The start of major sports (NFL, NBA), after being suspended for several months during the pandemic, pushed the number of payers on DraftKings by 64% in the third quarter of 2020.

How big is the pot?

Investors are betting big that the US online sports betting industry will become a massive industry — just how big?

• According to The American Gaming Association, Americans illegally bet over $150b annually on sports with just $5b placed legally.
• Morgan Stanley expects the industry to grow from $833m to $8b by 2025 — with a high range of $15b if legalized in all states.

For investors… Look for the dark horses

In a Business Insider interview with Paul Martino, an early investor in FanDuel, Martino recommends investing in opportunities at the “fringe of the industry” — those that are cheaper with less attention.

An area of opportunity is the technology that supports the sports betting industry — e.g. GameAccount NetworkGAN

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More opportunities: with investor interest high and the market hot, several online sports betting companies are going publics via SPACs:

• Golden Nugget Online, who operates online casinos, is going public via SPAC, Lancadia HoldingsLCA
• Rush Street, one of the largest online betting companies, is going public via SPAC, dMY Technology GroupDMYT

(Learn more: What is a SPAC?)