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Why DraftKings Blasted Higher on Monday

By Eric Volkman – Sep 28, 2020 at 7:07PM

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It was all about a potential cross-Atlantic acquisition in the betting industry.

What happened

Whoever placed a bet and collected on DraftKings (DKNG 2.32%) Monday came home a winner. Shares of the next-generation sports betting company rose by nearly 7% on the day, following some important news in its sector.

So what

DraftKings benefited from an international stock deal that is currently shaping up. Veteran casino resort operator Caesars Entertainment has made an approximately $3.7 billion offer for long-standing U.K. betting services provider William Hill. That values the British company at a rich 25% premium to its Thursday closing share price.

It's a clear vote of confidence in the future of sports gambling, which has taken off lately due mainly to two factors.

Electronic betting board featuring Major League Baseball games.

Image source: Getty Images.

The first is a gradual loosening of previously restrictive wagering laws in various locations around the U.S. The second is the coronavirus pandemic. The "stay in place" measures encouraged or mandated by health authorities have kept people at home, and many are desperate for fun activities to participate in from the safety of their living room.

Now what

Although DraftKings is still a young, loss-making company, it has lately signed a whole raft of sponsorship deals with big-time pro sports teams such as football's New York Giants.

Meanwhile, its business is thriving; earlier this month, CEO Jason Robins said in a Yahoo! Finance interview that "virtually every metric" for the company is up sharply on a year-over-year basis. For investors interested in this burgeoning sector, DraftKings is very much a stock to keep an eye on.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
$15.68 (2.32%) $0.35
Caesars Entertainment Stock Quote
Caesars Entertainment
William Hill PLC Stock Quote
William Hill PLC

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