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The Final Parlay: DraftKings ($DKNG) : wallstreetbets

r/wallstreetbets - The Ultimate Parlay: DraftKings ($DKNG)

Right here on a Sunday night time to present you autists a while to cross-check my information, begin your RH prompt deposit, and let your spouse’s bf know you are coming again with a vengeance. This is an in-depth evaluation on DraftKings and tips on how to maximize earnings over the foreseeable future to squeeze this for each tendie we are able to. Now that many states face income shortfalls because of the coronavirus pandemic and wider price range deficits, there must be a push to fill that hole and nothing is best positioned than sports activities betting.

As you all know, $DKNG got here to market by way of a SPAC merging with Diamond Eagle again in April, on the worst of the pandemic when dwell sports activities had been useless and there was extra uncertainty than ever for what was to return. Jason Robins, Draft Kings CEO, has balls of metal and knew that they wanted to get to market rapidly for a sports activities betting run-up the likes of which we have by no means seen. Sports activities at the moment are on their method again, with an enormous quantity of constructive catalysts arising within the subsequent few months to skyrocket this inventory to the moon and past.

Administration

I need to make clear that a considerable amount of my conviction from this play comes from the unbelievable administration crew main the corporate. CEO Jason Robins is a stand-up man and has led the corporate by way of an enormous quantity of scrutiny since its founding in 2012. He comes from an information analytics background which couldn’t be a greater match for the sports activities betting enterprise. He prioritizes the excessive velocity knowledge that fuels the DraftKings platform as its most useful asset and speaks typically on the dedication his crew has to moral values and inspiring a reliable surroundings for its customers to gamble their paychecks on the DraftKings platform.

I’ve linked an awesome interview to get to know the CEO and provides additional perception into DraftKing’s plans shifting ahead beneath and extremely suggest anybody getting in on this play give it a fast watch. Jason is optimistic about the way forward for state’s legalizing cellular sports activities betting shifting ahead and says they’ll proceed to speculate boatloads of cash into buyer acquisition prices by way of TV advertisements and billboards on a state-by-state foundation. Hyperlink: https://youtu.be/2OVFB9piEC0

Any of you who’ve come throughout DraftKings commercials, YouTube advertisements, billboards, know that their advertising and marketing is on level. This can be a nice play as a result of DraftKing’s enlargement has occurred to date on a state-by-state foundation. Which means that there’s a big a part of the nation (really the bulk) that’s nonetheless ignorant to the sports activities betting wave that’s coming in 2021. DraftKings is positioned extraordinarily effectively to cleared the path into the ~25 states nonetheless ready to go the invoice.

Laws

The truth that the highest four states within the nation nonetheless haven’t legalized on-line sports activities betting presents a HUGE alternative to journey this wave with little draw back danger. Sports activities have already gone by way of the worst-case situation throughout COVID shutdowns and survived—now we’ve acquired a large amount of constructive catalysts arising (NBA season, March insanity, Tremendous Bowl, and so on.) that the overall inhabitants is begging for some motion on, paired with more cash of their pocket from considerably much less leisure prices because the pandemic began.

The Wuhan Virus gave DraftKings a shot within the arm to streamline its method into most (if not all) of the remaining state’s ballots throughout Q1 and Q2 because of the large minimize in tax revenues that the lockdowns triggered throughout the nation. Governor Cuomo of New York launched a press release final week stating he’s now contemplating the passing of cellular sports activities betting so as to increase the state’s tax income throughout a time the place Congress utterly skipped them over by way of offering support by way of the stimmy. New York is a big catalyst shifting ahead. For my part, it is a make or break for the way issues search for DraftKings shifting ahead, and can largely affect how different states react. Cellular sports activities betting scares states as it’s new and so accessible, however should you do analysis into the Powerball and different loterry firms, it simply took a push in the correct path for states to appreciate how a lot cash they’re leaving on the desk by not taking part in these rising markets. Sports activities betting has already benefited the 9 states which handed the invoice (NJ main the way in which) and has NY in addition to each different governor, feeling main FOMO.

Present states the place on-line (cellular) sports activities betting legal guidelines have handed:

  • New Jersey

  • West Virginia

  • Indiana

  • Pennsylvania

  • New Hampshire

  • Iowa

  • Colorado

  • Illinois

  • Tennessee

Among the reported revenues from sports activities betting:

New Jersey: $931.6 million

Pennsylvania: $491.9 million

Illinois: $434 million

Indiana: $250.eight million

Colorado: $231.2 million

r/wallstreetbets - The Ultimate Parlay: DraftKings ($DKNG)

On Might 14, 2018, the US Supreme Courtroom discovered the Skilled and Beginner Sports activities Safety Act (PASPA), the federal legislation prohibiting states from authorizing sports activities betting, to be unconstitutional. It’s now as much as particular person states to determine in the event that they need to authorize and regulate sports activities betting of their state. Congress may take motion on the authorization and regulation of sports activities betting however has up to now left it as much as particular person states.

As you possibly can see, states are cashing out on the cellular sports activities betting wave, with New Jersey main the way in which and making a big a part of that income from NY residents crossing state traces to get their playing repair in. Gov. Cuomo has been against legalizing sports activities betting prior to now, calling it “a violation of the structure”…buut that was earlier than covid lockdowns and his state was drowning as much as their neck in debt.

DraftKings administration issued extraordinarily bullish steering with out even considering new states passing laws. This is without doubt one of the issues that I like about CEO Jason Robins that stood out to me within the hours of interviews/articles I’ve seemed over. This man is the top of underpromising and over delivering. The employees at Draft Kings are extraordinarily buyer centric and centered on robust ethics to assist them present a platform for sports activities aficionados to boost their viewing expertise. 

Knowledge-Pushed/Proprietary Tech Stack (the MOAT)

Laws apart, the opposite large catalyst is DraftKing’s distinctive method to proudly owning its personal knowledge and proprietary tech stack. I imagine that this will likely be the place DKNG separates itself from the competitors that’s speeding to this house and can give it the higher hand in buying, and retaining, a big share of recent customers throughout opening states.

From investor presentation: “Upon shut of the enterprise mixture, DraftKings will turn out to be the one vertically-integrated pure-play sports activities betting and on-line gaming firm based mostly in the US. By means of the enterprise mixture, DraftKings expects to appreciate synergies by transitioning its danger and buying and selling sports activities betting platform to SBTech’s, as an alternative of counting on a third-party platform. Along with lowering prices, DraftKings will management its backend system and product roadmap, differentiating the corporate from different U.S. operators and giving it the power to tailor its sports activities betting product to U.S. sports activities and customers.”

“SBTech is a world chief in omni-channel sports activities betting and gaming, with greater than 1,200 staff in 10 places of work worldwide. Since 2007, the group has developed the trade’s strongest on-line sports activities betting and on line casino platform, serving licensees in additional than 15 regulated territories. SBTech’s shoppers embody lots of the world’s premier betting and gaming operators, state lotteries, land-based casinos, horse racing firms, and iGaming start-ups. The group provides extremely versatile betting and gaming options to shoppers in search of distinctive configurability and the quickest path to market, complemented by confirmed enterprise intelligence and reporting capabilities. The SBTech providing contains its seamless sportsbook, Chameleon360 iGaming platform, managed companies, on-property sportsbook and omni-channel options that present gamers with fixed entry to sports activities and on line casino merchandise throughout all on-line, cellular and retail channels. Supported by unequalled experience in buying and selling and danger administration, acquisition and CRM, and the best requirements of regulatory compliance, SBTech’s companions persistently obtain fast development, enhanced model loyalty and document revenues.”

DraftKings prioritized OWNING their very own backend expertise by way of this merger with SBTech, making them the primary, and solely firm on this house to personal their danger and buying and selling platform. This offers DraftKings a large edge to the remainder of the market. It forked up the money to maintain all the things in home not solely to supply a greater buyer expertise, but additionally to widen the moat in opposition to rivals as new states come onboard. The important thing right here is to make clear that DraftKings and SBTech mixed to be the one participant available in the market with 100% vertical integration and management of their very own backend. Jason Robins and the remainder of the administration crew are putting their efforts on having the perfect expertise and the perfect product and actually going all in on proudly owning the U.S. panorama opening up, with as no use for cross-platform interplay as attainable.

This acquisition of SBTech was a whole sport changer as a result of it allowed them to be unbiased from paying income share to a third-party for betting traces and danger administration companies.

Clarification: no different sports activities betting/fantasy sports activities/on line casino firm at present has 100% vertical integration on the extent that DraftKings has established.

iGaming Growth

That is the place the market is lacking the mark. Take the time to learn over analyst stories, information articles, and interviews and you may rapidly discover 99% of the overall market is totally glazing over DraftKing’s iGaming sector. This trade has been a CA$H COW in Europe for awhile now, and is barely getting began in the US. Out of the businesses that occupy this house, DraftKings is the one one to create one synergistic platform for Fantasy sports activities/Sportsbook/iGaming. This will likely be an enormous worth proposition that may in the end rocket DraftKings to the highest of the gaming market and solidify it as THE gaming powerhouse shifting ahead.

r/wallstreetbets - The Ultimate Parlay: DraftKings ($DKNG)

The infrastructure driving DraftKing’s merchandise and Tech (multi functional platform)

Anybody that is watched the run of Skillz and the hype pushing PaySafe, is aware of how a lot anticipation there’s for iGaming to turn out to be the brand new norm on this planet of playing. DraftKings has emerged because the market chief in every state they’ve launched in, and proceed to realize increasingly more market share. As soon as new customers get launched to their platform, the cross-selling alternative is limitless and creates a particularly sticky buyer acquisition cycle.

Opponents like Penn and MGM are dinosaurs on this house and have been taking part in catch-up to DraftKings since 2012. The brand new age of gamblers do not need to drive to a bodily on line casino location or purchase a house desktop to gamble. Every little thing will likely be cellular and run in real-time. DraftKings has been constructing an unbelievable live-sports ecosystem (first to market) and innovates the chances of what you possibly can wager each day. Simply obtain the app for your self and do some exploring. I imagine that is going to increase within the TikTok/millennial crowd as extra states begin to hop onboard.

2021 Projections

Pulled from the investor presentation, $DKNG has smashed each one in all their 2020 assumptions listed beneath. For any stats guys on the market, I might like to see some fashions at how a lot of this market remains to be up for grabs. DraftKings has positioned themselves to be on the head of this motion, and I imagine that 2021 would be the 12 months we actually see them take off into triple digits share costs.

The catalysts are there, and the market is ripe for the taking. Their projections are extraordinarily conservative and administration lets the numbers do the speaking. For my part, it is a wager on the administration placing the dots collectively to EXECUTE as state laws begins to go their method, as soon as NY occurs this shift will happen quickly.

r/wallstreetbets - The Ultimate Parlay: DraftKings ($DKNG)

https://www.sec.gov/Archives/edgar/knowledge/1772757/000110465920032214/tm2012476d1_425.htm

The administration is unbelievable and actually shows a imaginative and prescient for eager to prop up shareholder worth within the long-term by way of priceless knowledge, a totally built-in platform, and aggressive buyer acquisition to take management of this market as states notice the financial deficits which they’re dealing with going into a brand new 12 months. This together with the unprecedented hype that’s going to be concerned with sports activities occasions this 12 months, will skyrocket DraftKings to new heights.

This isn’t a wager on sports activities betting alone, it’s a play on a data-heavy and analytically pushed behemoth, with strategic partnerships (league, crew, and movie star partnerships) and one of the vital aggressive advertising and marketing methods I’ve ever laid eyes on. The inventory soared earlier this years upon information of the Michael Jordan partnership (https://www.cnn.com/2020/09/02/investing/draftkings-michael-jordan-deal/index.html) and there’s many, many extra huge strikes within the pipeline.

Conclusion

Lengthy-term I’m extraordinarily bullish on individuals wanting danger to make up a every day a part of their lives. The psychology of sports activities betting resembles that of the lottery and is changing into vital for individuals to have the selection to put bets from the comfort of their cell phones. We’re shifting right into a future the place if danger and leverage usually are not concerned, individuals may have little curiosity in dedicating their time to issues. This shift will be seen with the increase in retail choices buying and selling (shoutout wsb gang) and may have the same impact in sports activities, iGaming, and random prop bets/surveys that Draft Kings is innovating closely in. This isn’t to say the infrastructure that DKNG is constant to construct out to rival that of Europe by way of dwell sports activities betting (which makes up three quarters of income for on-line sports activities books within the UK) and increasing their horizons to lesser betted on sports activities akin to tennis, golf, soccer, and so on.

For those who’ve gotten this far, congrats you are only a few steps away from hanging gold. Any suggestions, feedback, rebuttals, bear eventualities, and so on. please remark. Good luck.

Positions

$70c 1/21/22

$90c 1/20/23

r/wallstreetbets - The Ultimate Parlay: DraftKings ($DKNG)

🚀🚀🚀 Guess at your personal danger 🚀🚀🚀

Tl;dr

DraftKings has state laws motion coming, unbelievable administration, is data-driven, is vertically built-in/owns its tech stack, has publicity to the total vary of recent world gaming (Fantasy/Sportsbook/iGaming), and is forward of its competitors forming league, crew, and movie star partnerships.

$70c 1/21/22

$90c 1/20/23

Sources (do your personal DD dumbass)

https://www.legalsportsreport.com/42835/draftkings-kambi-2021/

https://sportsbook.draftkings.com/assist/sports-betting/where-is-sports-betting-legal?_ga=2.2847858.331721966.1608603855-1177209388.1608603855

https://www.legalsportsreport.com/46711/the-week-in-sports-betting-dec-21/

https://www.aol.com/information/why-draftkings-flutter-trading-lower-201654511.html

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