MLB 2027 Strike Could Hit Sportsbook Companies

Negotiations between Major League Baseball and the players' union have raised the possibility of a possible lockout before the 2027 season. According to a report sent to clients by Citizens Equity Research analyst Jordan Bender, the situation between the parties resembles that of 1994. That year's 232-day strike led to the cancellation of most of the regular season, the playoffs and the World Series.

According to Bender, the main point of contention in the talks is the salary cap the leagues want to introduce to limit team spending. The players' union opposes such restrictions. The analyst stresses that, although the length and outcome of the negotiations are uncertain, lockout risk deserves investors' attention at a time when companies are preparing to announce their 2027 forecasts.

The analyst says the companies most exposed to this risk are Flutter Entertainment, owner of FanDuel, and DraftKings, the two largest sportsbook operators in the United States. Bender notes that DraftKings and Flutter will soon report their third-quarter results, and warns that their 2027 forecasts may be too optimistic given the possibility of a prolonged strike.

In the US sports betting market, baseball ranks third behind the NFL and the NBA. For this reason, an extended strike could put pressure on the share prices of betting companies. Bender estimates that in the event of a strike, DraftKings could see high single-digit declines in betting volume in the second quarter of 2027. On the other hand, the absence of the World Cup in 2027 makes it harder to fully offset a possible loss.