Please ensure Javascript is enabled for purposes of website accessibility

DraftKings Keeps Betting on Itself

By Rick Munarriz - Mar 30, 2021 at 10:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A deal for a betting content network makes perfect sense for the fantasy sports and wagering specialist.

If there's a way to reach the perfect audience of gamblers there's a good chance that DraftKings (DKNG 3.37%) 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. 

A woman holding up a fan of money to her face.

Image source: Getty Images.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.72 (3.37%) $0.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.