Stock in sports gambling company DraftKings (DKNG) has risen by more than 66% over the past month.
You would think that the major sports leagues being suspended as they work on plans to hold events while limiting the spread of coronavirus would be bad for the business of betting on sports, but the stock market has other ideas.
The NFL is currently planning on its usual schedule, although there might be a shorter preseason. The country’s most popular sports league has already announced measures all teams will be taking to limit any potential spread of disease.
Meanwhile the NBA and NHL also recently announced revised schedules for postseason play set to take place starting in late July and early August.
Since markets are forward looking, it is maybe less surprising that investors are betting on DKNG as leagues announce plans to reopen.
That wager starts to look a bit weird when you dig in though. Since the NBA announced its return plans, DKNG has actually fallen in price. The stock is up 30.6% since the NHL made its announcement.
Looking back even further, DraftKings shares were trading around $16 before COVID-19 halted sports and crashed most stocks. The stock is now up to $39 which suggests that the recent rise doesn’t have much to do with sports coming back.
The stock market is supposed to be a place where investors make smart decisions--using their money to make money. It turns out, it can also be a perfect place for gambling. Some wagers may be well considered bets on stocks where all signs point to more winning while others can be speculative bets on underdogs.
Thousands of Robinhood investors decided the perfect time to invest in Hertz (HTZ) was after the company declared bankruptcy.
This is where DraftKings and the stock market have a lot in common. They are both places to potentially blow your life savings in an extremely short time.
When DraftKings got started it was about making bets on sports teams or fantasy leagues and pretty much anything in the world of sports. But the potential goes way beyond just one market relating to physical activity. People love to gamble on pretty much anything. A perfect example of this is Super Bowl Prop bets, which are available on anything you could think of.
DraftKings initially started as a place for daily fantasy leagues but with the launch of DraftKings Sportsbook they are about to capitalize on a major market that currently doesn’t have a dominant player.
Bets can be made on who is going to win the Stanley Cup in 2021 but why stop there? Why not odds for who is gonna win the election? What about betting on 2020’s most-popular baby name? DraftKings online platform and established user base sets the company up to make huge gains in the near future.
The biggest reason for all this potential growth is the fact that more states are starting to allow sports gambling. Gone are the days of needing to place bets through some shady bookie, now it can all be done online or in a mobile app.
This may well become the biggest part of DraftKings business if gambling becomes legal nationwide. Currently they are leading the wave in that respect. The biggest competition being is from Las Vegas casinos.
ESPN and Yahoo are two giants in the fantasy sports arena, but don’t have any experience handling money besides subscription fees. DraftKings still offers fantasy leagues for most sports than either, especially in the daily fantasy realm.
The lifting of sports gambling restrictions and the seemingly limitless growth in the popularity of sports will be huge for DraftKings. Nearly everyone involved in sports is making more money than ever before. Gambling is likely only going to grow as well.
What is even better is that online gambling faces relatively few difficulties from coronavirus once the leagues start up again. DraftKings is set up perfectly to be one of the biggest winners in a post coronavirus economy.
