Shares of DraftKings (NASDAQ:DKNG) climbed 13% on Monday, following the release of strong online gaming revenue figures in a major market.
The coronavirus pandemic and related social distancing directives forced casinos to close and sports leagues to postpone or cancel their seasons. That's driven bettors to online gambling sites in recent months. On Friday, New Jersey's Division of Gaming Enforcement said the state's internet gaming revenue in May surged 124% year over year to $85.9 million.
This bodes well for DraftKings. The digital sports entertainment company has an online gaming presence in New Jersey and several other states.
DraftKings' revenue has held up well during the COVID-19 crisis. Its revenue climbed 30% in the first quarter, despite the pandemic's negative impact on live sports events. DraftKings has provided bettors with the chance to place wagers on other events such as esports, which has helped to keep customers engaged with its platform.
Moreover, DraftKings' growth may be about to accelerate. Recent mixed martial arts contest UFC 249 was "officially the most-bet MMA event in DraftKings Sportsbook history," according to DraftKings communication director Stephen Miraglia. With the NFL, NBA, and NHL gearing up to restart in the weeks and months to come and Major League Baseball potentially resuming in the summer, sports bettors could soon have a lot more games to bet on.
Still, DraftKings' stock isn't cheap at about 17 times its projected revenue in 2021. But if it can gain the lion's share of the rapidly growing online betting market, its stock could have more upside ahead.