FA Alpha Daily

This company’s earnings will grow with online sports betting

The U.S. online sports betting market is experiencing explosive growth, fueled by a wave of legalization and a shift to mobile wagering. DraftKings (DKNG) is a major player in this game, capitalizing on its early entry and user-friendly platform. In today’s FA Alpha Daily, we explore how DraftKings is positioned to win big as the online sports betting market continues to mature.

FA Alpha Daily:
Thursday Uniform accounting analysis
Powered by Valens Research

Several converging factors have driven the rapid increase in online sports betting in the United States over the past decade. 

Digitization has made placing bets remotely much more convenient than visiting physical sportsbooks. This helped capture a wider audience beyond hardcore gamblers. 

In 2018, the U.S. Supreme Court ruling in Murphy v. NCAA struck down the Professional and Amateur Sports Protection Act of 1992, paving the way for states to legalize and regulate sports betting at their discretion.

This provided the necessary legal framework for companies like DraftKings (DKNG) to launch regulated online platforms. 38 states legalized and launched sports betting. 

The pandemic massively accelerated the shift to online and mobile as people spent more time at home and physical sportsbooks were closed. This forced both new and experienced gamblers to adopt online and mobile apps for their betting needs.

The surge in online activity helped normalize remote gambling and brought in a fresh batch of users who may continue as recreational bettors.

As one of the early entrants post-PASPA, DraftKings established itself as the clear leader in the emerging U.S. online sports betting industry.

It has consistently captured the highest market share of total handles based on its wide range of pre-game and live betting options across all major sports leagues.

DraftKings’ user-friendly design and features have also earned it the top spot in customer experience surveys. This advantage has enabled DraftKings to maintain robust revenue growth, even during broader economic downturns that dampened casino gambling.

The company has also made strategic acquisitions of media companies like VSiN and gambling technology firms like Golden Nugget Online Gaming to enhance its content and platform capabilities.

As more states regulate sports gambling and mobile wagering in the coming years, DraftKings is well-positioned to leverage its brand recognition and scale to quickly roll out in new jurisdictions. 

This gives the company a long runway for market share gains and revenue expansion. 

However, DraftKings also faces intensifying competition from other established operators like  MGM Resorts (MGM) looking to steal share, as well as new entrants with significant capital like ESPN. 

While DraftKings’ first mover advantage and experience make it difficult for challengers to dislodge it in the near term, maintaining leadership will require continuous product innovation, strategic deals, and defending its brand against deep-pocketed rivals. 

Overall, the U.S. online sports betting market matures towards $10 billion in annual revenues by the end of 2024 and is expected to show an annual growth rate of 12.08%, resulting in a projected market volume of $17 billion by 2029. 

If it continues dominating, handling and retaining high customer satisfaction, DraftKings could deliver substantial earnings growth and reward shareholders with further upside in the stock.


Do you want to learn more about resource and commodities investing?

The Rick Rule Natural Resource Symposium will return to Boca Raton, Florida on July 7 to 11, 2024, where attendees will gain access to exclusive insights on resource and commodities investing.

In this one-of-a-kind event, you’ll have an up-close look at some of the most profitable resource and commodities strategies for your portfolio. These exclusive insider insights will be provided by the industry’s “living legends,” all of whom will share fresh recommendations on how to profit from the ongoing commodities rally.

This is your chance to learn new insights and profitable strategies that will help you enrich your portfolio for the year ahead.

Register now through this link to secure your spot at the symposium. You have an option to register as an onsite attendee or via livestream only.

We hope to see you there!

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

The Uniform Accounting insights in today’s issue are the same ones that power some of our best stock picks and macro research, which can be found in our FA Alpha Daily newsletters.

Subscriptions & Services

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at +1 630-841-0683