Jan 21st 2020
Draftkings IPO - A Good Bet?
Draftkings is having their IPO this year, and it might just be the best long-term investment one can bet on. DraftKings will merge with Diamond Eagle Acquisition (NASDAQ:DEAC), a special purpose acquisition company (SPAC), and SBTech, a business to business technology and trading services provider for gaming companies. After the deal is complete, the betting platform will be the only integrated U.S. based sports wagering and online gambling company. Draftkings will finish with over $500 million in unrestricted cash on the balance sheet when the deal is consummated in the first half of 2020. The initial public offering will be valued at $3.5 billion dollars, with a ceiling of unlimited potential. 

As more and more states become legalized for sports betting in the United States, the footprint from Draftkings will only increase. As they did with the states of New Jersey and Pennsylvania – Draftkings will have a specified plan in place for every state as they become legalized. The indefinite quantity of business exposure will certainly lead to more dollars for shareholders. 

DraftKings started out with daily fantasy sports (DFS), which is where players create online rosters of actual athletes to contend in online contests based on how the athletes execute in existent games. The Fantasy Sports & Gaming Association calculates a total of 59 million people play fantasy sports in the U.S, spending an average of about $700 each on league-related costs each year. DraftKings is the leading fantasy sports outfit, with a 60% share of the market across 43 states and in eight international markets. However, the arrival of online gambling in 2018 with legal sports wagering, appointed fresh opportunities and DraftKings, along with rival FanDuel, is the most dominant existence in the gaming industry.

In 2009, the sports betting market was approximately $20 billion. By 2016, it was valued at $40 billion – a 100% gain. With a present market capitalization of $75 billion, the market has cautiously grown at a rate of $10 billion per year. This pace will only grow as more and more states add legalized sports betting to their dockets,and as a result, American sports betting will occupy a progressively momentous share of the world marketplace. 

Regardless of what percent this stock goes up it's first day, I would recommend buying it and storing it away for a much bigger price. As buying Draftkings stock is like betting on the gaming industry to succeed in the United States – a sure bet, if I have ever seen one!