Citizens: MLB 2027 Lockout Could Pinch Sportsbook Stocks

With third-quarter earnings season in full bloom and with the World Series shifting to Tampa Bay tonight, it’s worth noting that Major League Baseball (MLB) is staring at the specter of a possible labor lockout ahead of the 2027 season — a scenario that would likely weigh on sportsbook stocks. A 2027 MLB strike could be a drag on sportsbook stocks. (Photo by Mark Taylor/Getty Images) In a new report to clients, Citizens Equity Research analyst Jordan Bender says that the current state of affairs between the league and the MLB Players Association (MLBPA) is comparable to what was seen in 1994 — an ominous comparison for fans and sportsbook operators because those labor negotiations led to a 232-day strike, resulting in the cancellation of much of the regular season, the playoffs and the World Series. “The primary sticking point in the upcoming negotiations appears to be a potential salary cap, which owners want to implement to limit team spending, while the players’ union opposes such restrictions,” observes the analyst. “While the duration and outcome of the upcoming negotiations remain uncertain, we believe the potential for a lockout warrants investor attention as companies prepare to provide 2027 guidance.” He notes that FanDuel owner Flutter Entertainment (NYSE: FLUT) and DraftKings (NASDAQ: DKNG) are most exposed to potential adverse effects from an MLB strike, which makes sense because those are the two largest U.S. sportsbook operators. Worst-Case MLB Scenario Could Sap Sportsbook Stocks Bender adds that timing matters because with DraftKings and Flutter soon entering the earnings confessional, either or both operators could issue 2027 guidance that may ultimately prove too elevated against the backdrop of a prolonged MLB strike. DraftKings, which reports third-quarter results on Nov. 5, is widely expected to issue initial 2027 guidance. Bender points out that FanDuel and DraftKings are forecasting handle growth of 3% and 7%, respectively, over the second and third quarters of 2027 — periods including significant portions of baseball season. Although MLB trails the NFL and the NBA in terms of popularity among bettors, baseball is one of the “big three” in the U.S. sports betting landscape, indicating that extended labor strife could be a drag on sportsbook stocks. “Currently, we estimate DraftKings’s and Flutter’s handle will decline by high-single digits in 2Q27 and3Q27,” says Bender. “The wild card during that same period would be a lockout that extends into the MLB season, creating additional downside risk across online gaming estimates. We estimate the baseball sports betting handle will total ~$19 billion in 2026, representing ~25% of total industry handle in 2Q26 and 24% in 3Q26.” Calendar Woes for Sportsbook Stocks Due to the World Cup and the New York Knicks winning the 2025-26 NBA title, sportsbook operators were already facing tough comparisons for the third quarter of 2027, indicating some level of vulnerability to a possible MLB labor stoppage. Some of the effects of a potential baseball strike could be mitigated if bettors move over to other sports, but with the World Cup out of play in 2027, MLB labor strife could plague sportsbook operators’ third-quarter earnings before interest, taxes, depreciation and amortization (EBTIDA). “Applying 3Q26 handle market shares, we estimate FanDuel and DraftKings would face the largest EBITDA impacts if games are canceled, including handle declines of 32% for DraftKings in 2Q27 and 33% for FanDuel based on our current estimates,” concludes Bender. The post Citizens: MLB 2027 Lockout Could Pinch Sportsbook Stocks appeared first on Casino.org.