DraftKings (DKNG) is one of the world’s top online sports betting businesses. Super Group (SGHC) is a Malta-based holding company incorporated in July 2020 to bring together Betway, an online sports betting brand, and Spin, a multi-brand online casino.

DraftKings went public in July 2020, merging with Diamond Eagle Acquisition Corp., a SPAC (special purpose acquisition company). Super Group also went public through a SPAC, merging with Sports Entertainment Acquisition Corp. on Jan. 27, 2022, 18 months after DraftKings. 

In the past year, DraftKings stock has lost 23% of its value, while SGHC stock is up 152%. As a result of these gains, Super Group’s stock moved up 29 spots in Barchart’s Top 100 Stocks to Buy on Monday. 

Now in the 54th spot, investors wonder whether its weighted alpha of 124.12 will continue to increase, pushing it higher on the top 100 stocks to buy.

I’ll consider the pros and cons of betting on Super Group. 

It’s a Super Bet 

I’m the last person who should be discussing a gambling business. Our honeymoon was on a cruise ship when my wife and I married. We went into the casino and couldn’t get rid of the $20--our agreed-upon spending limit--fast enough. That was 2005. We’ve only been inside a casino a handful of times since. None were to gamble. 

I digress. 

Unfamiliar with Super Group, I had no idea that its largest market is Canada, where both Betway and Spin operate in Ontario, generating 568.1 million euros ($643.6 million) in 2024 revenue, and accounting for 94% of its 602.8 million ($682.9 million) in North American revenue. 

Given the one-sided split between its Canadian and U.S. revenue, it’s not surprising that Super Group announced last July that it would shut down Betway’s nine U.S. markets due to their unprofitability. 

“As a global business, we constantly evaluate the optimal use of our resources across all markets in which we operate,” said CEO Neal Menashe. “We have recently concluded an extensive review of our U.S. operations and, at present, we do not see a long-term path to profitability for the sportsbook product.”

Super Group maintained its U.S. iGaming business, which is well-known in New Jersey and Pennsylvania. 

Its Ontario business, on the other hand, is in the top tier of sports-betting revenue generators in Ontario. It’s not going anywhere. 

Last August,  Super Group CEO Neal Menasche said it was ready to expand its Canadian business to Alberta. 

“Regulation is coming in Alberta,” Menasche said at the time. “Everything we did in Ontario, we’ve learned to do it even better. …We’re optimizing everywhere. Alberta would be no different than Ontario, same as our business in Africa. Our cost efficiencies are dropping down to the bottom up.”

The Alberta provincial government introduced legislation at the end of April to create the Alberta iGaming Corporation, a crown corporation to oversee the new market, under the regulatory auspices of the AGLC (Alberta Gaming, Liquor and Cannabis). It’s close.  

As I said before, I’m not a gambler, but it makes sense to create a regulated betting environment for those who do. It’s a win for the province, gamblers, and Super Group. 

Alberta is Canada’s fourth-most populated province, behind only British Columbia, Quebec, and Ontario, which is by far the largest market. 

Super Group operates five brands in Ontario: Betway for sports betting and Spin, Jackpot City, Royal Vegas and Ruby Fortune for iGaming. 

As of November 2024, Super Group’s Ontario market share had grown to 7%, 300 basis points higher than a year earlier. 

“Ontario’s better, it’s not where we need it to be but we are still in a good position there and we still have a decent share of the market. We are probably relatively under-indexing marketing-wise, relative to some of the bigger competitors, but we are now looking at fixing that,” Canadian Gaming Business reported the CEO’s comments in November. 

The potential in Canada is significant. 

A Bet on Super Group Will Come Up Snake Eyes 

The most significant negative aspect of Super Group’s business is its margins. They’re okay for a gambling operation but can’t hold a candle to someone like Apple (AAPL), whose EBITDA margin in the latest 12 months ended March 29 was 34.7%. 

In 2024, Super Group’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was 330.3 million euros ($374.9 million), a 19.4% margin. Excluding its U.S. operations, its adjusted EBITDA was 391.1 million euros ($443.9 million), up from 198.2 million euros ($225.0 million) in 2023, 97.3% higher year-over-year. 

However, when compared to DraftKings, whose 2025 projected EBITDA will be $950 million from $6.45 billion in revenue, an EBITDA margin of 14.7%, 470 basis points less than Super Group. 

The other negative is revenue growth.

In 2024, its revenues increased by 18%, to 1.7 billion euros ($1.93 billion); in 2025, they’re projected to increase by 13%, to 1.92 billion euros ($2.18 billion). 

Meanwhile, DraftKings expects its revenues to grow 35% in 2025, to $6.45 billion, three times more than Super Group’s revenue. 

With little hope of growing its business in the lucrative (and competitive) U.S. market, investors will have to rely on Super Group continuing to grow in other parts of the world, especially Africa and the Middle East, which now accounts for 39% of revenue, up from 28% in 2023, and 21% in 2022.

To Bet or Not to Bet on SGHC Stock

According to MarketWatch, five analysts cover SGHC; 100% rate it a Buy, with a median target price of $10.48, 21% higher than its current share price.  

According to S&P Global Market Intelligence, Super Group’s enterprise value of $4.11 billion is 2.34x its revenue from the last 12 months, and 1.9x its revenue for the next 12 months. That’s considerably less than 3.69x and 2.76x, respectively, for DraftKings, despite its significant gains over the past 52 weeks. 

The expected move of its stock over the next 73 days is 15.89%. That gets its share price to $10, 50 cents below the analyst’s target price over the next 12 months. So, why not consider a call option with a $10 strike to play Super Group?   

The July 18 $9.85 call has an ask price of $0.50, or 5.1% of the strike price. Currently 15.07% out of the money, your breakeven is $10.35, 20.91% higher than its current share price of $8.56.

While the probability of profit is low at 22.88%, the $50 net debit will not break the bank for most.