Portfolio Manager Insights

A growth play on online sports gambling stocks

After facing years of regulation and other hurdles, online sports betting has entered a new phase of rapid growth and market penetration, says Fidelity’s Peter Belisle.

By: Peter Belisle
Updated: 2/23/2026
  • Fidelity Portfolio Manager Peter Belisle has raised the stakes in his view of the online sports-betting market, which he says has benefited from broader legalization across the U.S., rising user engagement and improving profit margins.
  • “I believe online sports betting is still in its early innings as an industry, with many operators poised for meaningful structural growth seven years after the U.S. Supreme Court struck down a federal ban on state-authorized sports betting,” explains Belisle, who manages Fidelity® Select Leisure Portfolio.
  • In helming the industry-based, equity-focused strategy, Belisle seeks companies with competitive moats or secular tailwinds, as well as strong cash generation and investment opportunities with the potential for elevated returns.
  • His preference for businesses in subindustries benefiting from strong demand and constrained supply has drawn him to online sports betting, where he has chosen structurally advantaged firms he believes are well-positioned to capitalize on favorable trends.
  • Although 39 states, along with Washington, D.C., and Puerto Rico, have authorized some form of sports betting, substantial growth opportunities still remain in California and Texas, two populous states where online sports and entertainment gambling has yet to be legalized, he says.
  • “Americans love sports and gambling, and I think the U.S. market can continue to grow the per capita consumption of sports gambling for many years,” Belisle contends.
  • He also sees room for growth among existing states that have authorized sports betting, believing the number of U.S. adults who have participated in online sports betting still has room to grow. “Roughly half the U.S. adult population is now able to participate, but only a small fraction of that is engaged as of the end of 2025,” he notes.
  • Belisle adds that the industry has been coalescing toward a duopoly market structure around market-share leaders Flutter Entertainment (parent of FanDuel) and DraftKings Holdings.
  • “Existing players that haven’t established a dominant position (e.g., Penn Entertainment) are under tremendous pressure to deliver profits, while others have already exited the field (i.e., Wynn Resorts),” says Belisle. “The upshot of this is a likely decrease in marketing/promotional spend and improved profitability among established players in this space going forward.”
  • Belisle’s constructive view of the industry is reflected in the fund’s sizable exposure to DraftKings and Flutter as of December 31, 2025. Both stocks came under pressure in 2025 following the rollout of prediction-markets businesses, an unregulated form of betting that offered new entrants a backdoor into sports gambling. Although many investors believed this model posed a competitive threat to the market share of DraftKings and Flutter, Belisle holds a different view.
  • “I think this perspective is overly simplistic and doesn’t appreciate the difference in product complexity between prediction markets and online sportsbooks,” he says. “In 2026 and beyond, I think it will become increasingly clear that prediction markets are not displacing sportsbooks – and there may be some eventual legal challenges anyway – all of which sets up well for reversing this negative narrative.”
  • “Right now, online sports gambling is a ‘winners-take-most’ market dominated by a small number of players,” Belisle concludes. “And we are nowhere near mature, long-term duopoly economics, meaning the stocks appear meaningfully cheaper on a true long-term economic basis.”
Explore more on:
Consumer Discretionary Disruption Equity Industry Sectors Thematic

Related insights

View all
Portfolio Manager Insights
A growth play on online sports gambling stocks
After facing years of regulation and other hurdles, online sports betting has entered a new phase of rapid growth and market penetration, says Fidelity’s Peter Belisle.
Portfolio Manager Insights
A renaissance in nuclear energy investments
In the evolving landscape of clean energy, Fidelity’s Asher Anolic believes nuclear power is reclaiming its place as a pivotal force in global decarbonization efforts.
Portfolio Manager Insights
The aerospace industry’s flight path to recovery
With aircraft production rebounding and demand for maintenance surging, both original equipment and aftermarket aerospace companies are gaining altitude, says Fidelity’s Clayton Pfannenstiel.

For specific fund information such as standard performance and holdings, please go to the "Funds Managed" link on this page.

Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice, and you are encouraged to consult your own lawyer, accountant, or other advisor before making any financial decision. These materials are provided for informational purposes only and should not be used or construed as a recommendation of any security, sector, or investment strategy.

Fidelity does not provide legal or tax advice and the information provided herein is general in nature and should not be considered legal or tax advice. Consult with an attorney or a tax professional regarding your specific legal or tax situation.

Past performance and dividend rates are historical and do not guarantee future results.

Investing involves risk, including risk of loss.

Diversification does not ensure a profit or guarantee against loss.

Sector funds can be more volatile because of their narrow concentration in a specific industry. Growth stocks can perform differently from other types of stocks and the market as a whole and can be more volatile than other types of stocks. Value stocks can perform differently than other types of stocks and can continue to be undervalued by the market for long periods of time. • Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. • Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. • In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation, credit, and default risks for both issuers and counterparties. • Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. • Floating-rate loans may not be fully collateralized and therefore may decline significantly in value. • The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes, and the financial condition of the issuers of municipal securities. • The securities of smaller, less well-known companies can be more volatile than those of larger companies. • The funds can invest in securities that may have a leveraging effect (such as derivatives and forward-settling securities) that may increase market exposure, magnify investment risks, and cause losses to be realized more quickly. • Leverage can magnify the impact of adverse issuer, political, regulatory, market, or economic developments on a company. In the event of bankruptcy, a company’s creditors take precedence over the company’s stockholders. Although the companies that the fund invests in may be highly leveraged, the fund itself does not use leverage as an investment strategy. Changes in real estate values or economic downturns can have a significant negative effect on issuers in the real estate industry. In the event of bankruptcy, a company’s creditors take precedence over the company’s stockholders. Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC.

935097.125.0
41E164429AE7420081140CAA31AC1ACB