DraftKings debuted as a publicly traded company on Friday, April 24, 2020, and it has since seen its … [+] ASSOCIATED PRESS
Andrew J. Silver
If someone had told you at the beginning of 2020 that, by March, global sports would largely shut down, with a slow resumption not happening until the summer of 2020, you may have predicted that 2020 would be a bad year for businesses involved in sports wagering, fantasy sports, and iGaming. Yet, the rapid legalization of sports wagering across the United States has not relented, which has fueled continued prosperity for gambling operators and related companies. This is in spite of the absence of American sports (and relative absence of most other sports) to fuel those businesses’ revenues.
Perhaps the most striking example is that of DraftKings. In the middle of the pandemic this spring, DraftKings completed a merger with Diamond Eagle Acquisition Corporation (a special purpose acquisition company) and SBTech (a gaming technology company). As a result of the merger, DraftKings started trading on NASDAQ in April, ending its first day of trading at $19.35/share. In the time since, DraftKings’ stock has continued to rise, peaking at $44.79/share—and it sits at $32.43/share as of the close of business on July 10. After the initial price surge, DraftKings announced in June that it and its shareholders were selling an additional 33 million shares to the market.
DraftKings is not alone
Surprisingly—given the almost nonexistent sports landscape in 2020—DraftKings is not an outlier among sports gambling operators. Back-end business-to-business supplier GAN Limited, which provides iGaming software to the U.S. land-based casino industry (boasting Borgata, Parx Casino, Maryland Live!, and Jack Entertainment amongst its partners), also had its IPO during the pandemic, opening at a price of $8.50/share on NASDAQ in early May. Much like DraftKings, GAN’s share price has skyrocketed since its debut, closing at $25.69/share on July 10.
And just this week, Golden Nugget joined DraftKings as the only “solely online” U.S. casino company being publicly traded, following Houston Rockets owner Tilman Fertitta’s purchase of Golden Nugget Online Gaming by his company Landcadia Holdings II. Shares in Golden Nugget Online climbed over 14 percent in its first day of trading on July 9. Further evidencing the enthusiasm for sports wagering in the marketplace was the June launch of Roundhill Investments’ Sports Betting & iGaming “BETZ ” ETF, which counts GAN, GVC, Flutter, and DraftKings amongst its top holdings.
Enthusiasm for iGaming and sports wagering in the U.S. market has not only taken the form of companies making their debut on public markets. Indeed, last week, ROAR Digital—the joint venture launched in 2018 between MGM Resorts International and GVC Holdings that offers sports betting and online gaming products in the U.S. as BetMGM—announced that MGM and GVC were investing additional funds in the venture. The added funds will bring their initial commitment of $200 million up to $450 million. BetMGM states that it is on pace to operate in 11 states by the end of the year.