Sports gambling continues to soar, with last week’s Super Bowl contributing to the pattern.

Wagering for the big game hit a Super Bowl record. Looking more broadly, combined in-person and online sports betting revenue jumped 23% in the third quarter from a year earlier, to $2.15 billion, according to the American Gaming Association.

“Americans continue to migrate their action to the protections of legal, regulated sportsbooks in record numbers,” said AGA President Bill Miller. “This sustained demand only reinforces the need for federal and state enforcement against illegal, offshore operators.”

The Supreme Court struck down a ban against sports gambling in 2018, allowing states to legalize it if they want. Sports betting is now legal in 38 states and Washington, D.C.

Morningstar analyst Dan Wasiolek, like others, expects that number to grow. “We expect another handful to be added in the next few years, as governments look to capitalize on tax revenue generated from the growing activity,” he wrote in a report.

As a result, he sees the North American sports betting and iGaming market reaching $40 billion to $50 billion in revenue by the early 2030s from over $13 billion in 2022.

DraftKings is a Top Player

DraftKings  (DKNG) , the online sports gambling titan is likely the largest company with a sportsbook, as measured by market capitalization. Its market cap totals $20 billion.

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Daily fantasy games play a big role in DraftKings’ strength. “It has extended its leading daily fantasy sports position, first established in 2012, into one of the top positions in the North American sports betting and iGaming market,” Wasiolek said.

DraftKings, combined with competitors FanDuel and MGM Resorts International  (MGM) , has a 70% to 80% revenue share of the market, he said.

But that doesn’t mean DraftKings is walking on easy street, Wasiolek said. “Despite our prognosis for strong market revenue growth over the next 10 years, we don’t believe DraftKings has a moat [durable competitive advantage],” he said.

“The industry is highly regulated and faces intense competition. States can change tax rates, delay legalization, and limit market access.”

In addition, new sports betting offerings from Fanatics and ESPN/Penn Entertainment PENN present serious competition for DraftKings, Wasiolek said.

Bullish Analysts for DraftKings

Two analysts on Wall Street expressed enthusiasm for DraftKings, which is scheduled to report fourth-quarter earnings Thursday.

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Oppenheimer analyst Jed Kelly noted that the company has positive expectations for the report in light of strong competitive dynamics and profit margins, according to The Fly.

DraftKings stock has beaten the S&P 500 by 17 percentage points year to date, suggesting short-term investors see the company raising it 2024 earnings guidance, he said. With its fundamentals strong, Kelly favors buying the stock if there’s a pullback related to guidance wording.

He raised his price target for DraftKings shares to $55 from $44, keeping an outperform rating. DraftKings recently traded at $42.75.

Meanwhile, Piper Sandler analyst Matt Farrell said his firm’s data related to DraftKings’s exposure to various Super Bowl bets presented a mixed picture, The Fly reports.

But wider industry trends are still strong, with the number of Americans expected to place a bet on the Super Bowl up 35% from last year, he said.

And after the game, DraftKings and Barstool Sports announced a sports betting partnership, which should help DraftKings engage and retain customers, Farrell said.

He raised his price target on DraftKings stock to $50 from $40, maintaining an overweight rating.

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