If there's a way to reach the perfect audience of gamblers there's a good chance that DraftKings (DKNG +0.04%) is either already there or hanging out nearby ready to pounce. The popular provider of fantasy sports games and live sports wagering is acquiring Vegas Sports Information Network (VSiN), a broadcasting platform and content creator for the betting industry.
Terms of the deal haven't been disclosed, but it's easy to see why this is a smart move. DraftKings currently offers mobile or retail sports betting in 14 different states, and that will continue to grow with the expansion of legal wagering on live events in this country. Between its fantasy sports contests and its sportsbook businesses it will be reaching the ideal demographic group with VSiN viewers. DraftKings should also help expand the visibility if not distribution of VSiN itself. There are winners and losers in most wagers, but this is one bet where both parties come out as victors.
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Betting on the house
VSiN was launched just four years ago by Brian Musburger, nephew of iconic sportscaster Brent Musburger. Brent actually retired after 50 years of calling major sporting events to join the family business. The platform that began with just five hours of daily programming is now at just over 18 hours of live content a day.
The pairing makes sense, and you don't need to be a seasoned better to see this happening. Boston-based DraftKings opened an office in Las Vegas last year, and VSiN -- at the right price -- is the perfect platform for its master plan.
DraftKings has brokered deals with leagues, teams, and sports networks to be the exclusive fantasy sports partner. It may seem innocent enough. Your friendly fantasy football league doesn't seem like a gateway to high-stakes gambling. It's still a foot in the door for DraftKings to feed confident sports fans into its higher-margin realm of sportsbook offerings.
DraftKings is definitely playing the part of a successful gambler. Pro forma revenue soared 98% in its latest quarter. It began this year with 1.5 million players, 44% more than it was servicing a year earlier. Average revenue per paper is the real star metric here, up a tasty 55% over the past year.
Growth investors aren't having a problem warming up to DraftKings since it hit the market at $17 in April. The stock has more than tripled in the 11 months since its IPO. The future was bright before VSiN came into the picture. Momentum is moving in the direction of states loosening restrictions on conventional wagering as a way to generate needed tax revenue. With VSiN's growing audience now on its side -- and the clear paths to build the content platform's viewership -- it makes perfect sense. You don't want to bet against DraftKings at this point. It's playing this game at a different level. It's skating where the puck is going, and this week's VSiN deal looks like another winning score for DraftKings.
