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DraftKings' (DKNG) Upcoming Launch in Michigan to Aid Expansion

Zacks Equity Research
·3-min read

DraftKings DKNG has been focused on expanding the market presence of its sports-betting platform to drive customer acquisition. The company’s recent announcement to launch its mobile Sportsbook and Casino app in Michigan, on Jan 22, in collaboration with Bay Mills Resort & Casino, falls in line with the same trend.

The upcoming launch will bring the company’s mobile sports-betting services to a total of 11 states in the United States. It introduced mobile sports betting in Colorado, Illinois, Iowa and Tennessee in 2020.

DraftKings’ wide casino portfolio, which includes 17 blackjack, six roulette and three Baccarat exclusive offerings along with its Sportsbook, will be offered to the Michigan customers.

Growing Momentum in the Sports-Betting Platform Bodes Well

DraftKings’ shares have surged 270.8% over the past year compared with the Zacks Gaming industry’s growth of 1.8%.

DraftKings Inc. Price and Consensus

DraftKings Inc. Price and Consensus
DraftKings Inc. Price and Consensus

DraftKings Inc. price-consensus-chart | DraftKings Inc. Quote

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This outperformance can be attributed to the pent-up demand for sports-betting from the cancelation of major sports events due to the coronavirus crisis. Resumption of sporting events and the return of major sports leagues bode well for the company’s top line.

Moreover, DraftKings’ growing sports-betting footprint across additional states has expanded its addressable market, which has aided user acquisition for the company.

Notably, the company’s average monthly unique payers soared 64% year over year from 621,000 to 1,021,000 in third-quarter 2020, primarily due to higher customer engagement on its casino and sports-betting platform along with expansion in several new states.

Further, robust demand for iGaming, such as online Blackjack and Roulette, is a major positive. Also, in 2020, the company introduced its Casino Product Suite in West Virginia and Pennsylvania, to boost its presence in the iGaming space.

Expanding Partner Base Fuels Growth

Notably, the sports-betting operator has inked a string of partnership deals with various sports leagues and media companies.

It entered into a multi-year deal with the Chicago Cubs, making the company an exclusive sports-betting operator and daily fantasy partner of the team. The company also inked an agreement with New York Giants to become the official sports betting, gaming & casino and daily fantasy partner of the team.

DraftKings has struck similar partnership deals with sports icon Michael Jordan, Disney’s DIS ESPN and Turner Sports, a subsidiary of AT&T's T WarnerMedia. Also, it signed a multi-year extension deal to remain the daily fantasy sports partner of Major League Baseball.

The company’s growing partner base boosts user engagement on its platform and helps fortify its leadership in the U.S. sports betting market, thereby aiding its growth prospects in the near-term.

Zacks Rank & A Stock to Consider

DraftKings currently has a Zacks Rank #4 (Sell).

A better-ranked stock in the broader Consumer Discretionary sector is Nintendo NTDOY. It carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Nintendo is currently pegged at 9.9%.

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AT&T Inc. (T) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Nintendo Co. (NTDOY) : Free Stock Analysis Report
 
DraftKings Inc. (DKNG) : Free Stock Analysis Report
 
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