Beyond the Hype: Is iGaming the Most Undervalued Sector in Tech?

Or, as the industry calls it, iGaming.

Let’s get this out of the way: this isn’t about the ethics of betting. This is about the numbers. And the numbers are staggering.

The global online gambling market is projected to hit USD 105.5 billion in 2025 and is forecast to rocket to USD 286.4 billion by 2035. That’s a CAGR of 10.5%.   

For context, that’s faster growth than the global cloud computing market.

So why the hesitation? For years, the market was a regulatory mess, especially in the US. But since the 2018 Supreme Court ruling opened the floodgates, we’re seeing a state-by-state domino effect. This has transformed iGaming from a "gray market" curiosity into a legitimate, high-growth, and—most importantly—investable industry.   

If you’re a trader, and you’re not tracking stocks like DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT), you might be missing one of the biggest stories in the market.

The "Big Two" and Their Market Position

Let's just look at the two 800-pound gorillas.

1. Flutter Entertainment (FLUT): This is a global behemoth. They own FanDuel, Paddy Power, and PokerStars. They are the definition of a blue-chip stock in this sector. With a market cap hovering around $38-39 billion , they are a diversified giant. Their strategy has been simple: aggressive acquisition and market dominance. They are in the UK, Australia, Italy, and, most importantly, have secured the #1 spot in the lucrative US market through FanDuel.   
2. DraftKings (DKNG): This is the high-growth "American" story. They went from daily fantasy sports to a full-blown online sportsbook and casino. With a market cap of around $15.2 billion , they are smaller than Flutter but have an incredibly strong brand. However, their path has been rockier. DKNG stock has been volatile, with BofA Securities recently downgrading it due to concerns over iGaming market share slipping from 27% to 23% and increased tax risks.   

This is where the real analysis begins. Are you a "value" investor or a "growth" investor?

A bear would look at DraftKings' P/B ratio of 14.2  and say it’s wildly overvalued, especially for a company still struggling for consistent net-positive income. A bull would say that in a high-growth emerging market, P/E and P/B ratios are useless; it’s all about revenue growth and customer acquisition cost.   

The Next Frontier: New Markets and Tech

The real excitement for this sector isn't just its current performance; it's the future.

1. New Market Legalization: This is the most obvious catalyst. Every time a new US state (like North Carolina or Vermont recently ) or a massive country (like Brazil ) legalizes and regulates the market, it’s like a new territory has been opened. This creates a land-grab for operators, and the market rewards those who acquire new customers fastest.   

2. The Crypto & Fintech Angle: While some new markets like Brazil are banning crypto-gambling , the "crypto casino" niche is booming elsewhere. It’s a fast-growing sector in its own right, tapping into a demographic that is digitally native and values anonymity. This convergence of finance and entertainment is a trend that traders on this very site should be watching.   

3. B2B Technology: This is the "picks and shovels" play. Most investors think of the B2C (Business-to-Consumer) brands like DraftKings. But the real tech story might be in the B2B (Business-to-Business) providers. These are the companies that provide the "white label" platforms, the data feeds, the risk-management tools, and the payment processing that all the other brands run on. As Forbes contributors have noted, this is a space to watch.   

The Risk: It's Not a Sure Bet

This isn't a "buy-and-forget" sector. The risks are unique and significant.

• Regulation: A new tax or a new restriction (like the proposed ad-bans in Brazil ) can wipe billions off a stock's value overnight.   
• Competition: The cost to acquire a customer is brutal. Companies are spending billions on "free bets" and marketing, which guts their short-term profits.
• Perception: It’s still a "vice" stock for many funds, which can limit its upside.

This is a sector for investors with a strong stomach and a long-term horizon. You have to understand the underlying product, not just the stock ticker. Many investors who want to understand this space spend time learning more about the consumer-facing platforms themselves, just to understand why users pick one over another.

The iGaming Sector: A High-Growth, Undervalued Tech Proposition

The question of whether the iGaming (interactive gaming or online gambling) sector is currently undervalued is a compelling one, particularly when examining its long-term financial trajectory. A deep dive into the 10-year growth projections reveals a sector that is not merely expanding, but is poised for explosive market share gains and technological innovation, making it difficult to dismiss its investment potential.

However, investors must approach iGaming with a clear understanding of its inherent characteristics. This is a classic high-volatility, high-growth tech play. This dual nature means that while the potential for significant returns is substantial, it is accompanied by higher risk and market swings than more established, mature industries.Key Factors Driving the Growth and Volatility:

• Global Digital Adoption: The ongoing shift from land-based casinos and betting shops to digital platforms is the primary catalyst. Improved mobile technology, faster internet speeds (5G), and increased comfort with online financial transactions have opened up massive new markets.
• Regulatory Evolution: The regulatory landscape is a double-edged sword. On one hand, newly regulated markets (such as various US states and countries in Latin America) unlock vast new revenue streams, fueling rapid growth. On the other hand, regulatory crackdowns, tax hikes, or licensing delays in established markets introduce sudden, sharp volatility. This regulatory flux is a key driver of the sector's high-risk profile.
• Technological Innovation: Companies are constantly pushing the envelope with live dealer technology, virtual reality (VR) experiences, and sophisticated data analytics/AI for personalized gaming and robust compliance checks. This continuous innovation requires high capital expenditure but also secures a competitive edge and high user retention rates.
• Mergers and Acquisitions (M&A) Activity: The sector is characterized by aggressive M&A as larger, established players seek to acquire market access, technology, and proprietary user bases, leading to valuation spikes and consolidation that can drive short-term price movements.

The Investment Imperative: Do Your Own Research

Given this intricate landscape, the most critical piece of advice remains: Do your own research (DYOR). The high-growth narrative should not replace a meticulous examination of individual company fundamentals. Investors should scrutinize:

1. Jurisdictional Risk: The percentage of revenue derived from stable, fully regulated markets versus those still under legislative review.
2. User Acquisition Costs (UAC): The cost of acquiring a new player, which can be astronomical in competitive, newly launched markets.
3. Technology Platform: Whether the company operates on proprietary, scalable technology or licensed third-party platforms.

Conclusion: Ignoring the Noise

The essential message for the prudent investor is clear: don't ignore it just because of what's being sold—or, more accurately, what is being stereotyped. The iGaming sector often carries a social stigma or is associated purely with short-term speculative gambling stocks. This perception can lead to a fundamental undervaluation by institutional investors who hesitate to enter the market.

By focusing on the underlying financial metrics, the powerful digitalization trends, and the maturation of the regulatory environment, savvy investors can distinguish between noise and genuine, long-term technological disruption. The sector offers the kind of multi-year, double-digit growth prospects typical of early-stage tech, but requires a high-tolerance for market volatility and a commitment to independent due diligence.