Please ensure Javascript is enabled for purposes of website accessibility

Why DraftKings Stock Jumped 8.4% Today

By Travis Hoium – Updated Jan 7, 2022 at 2:53PM

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

DraftKings is coming to New York!

What happened 

Shares of DraftKings (DKNG 7.10%) had another strong day on Friday on the back of news that it will launch its online sportsbook in New York tomorrow. Shares traded as much as 8.4% higher and are up 4.5% at 1:20 p.m. ET. 

So what 

The state of New York passed an online gambling bill in April and recently approved DraftKings, Caesars Entertainment, Rush Street Interactive, and FanDuel, which is owned by Flutter Entertainment, to operate online gambling in the state. This opens up one of the country's largest markets to online gambling. 

Person making sports bet online.

Image source: Getty Images.

DraftKings will launch on the first available day, which is Saturday, Jan. 8, in advance of the NFL Playoffs. This is an important weekend with betting surging up to and including the day of the Super Bowl.

Now what 

One of the best ways for DraftKings to grow is to expand into new markets, and this is doing exactly that. Investors have known for some time that online betting in New York was on the horizon, but now it's actually here and that's why the stock is surging. 

As positive as the news is for the stock, keep in mind that this will be a very competitive market and DraftKings is likely to lose money in New York before it becomes profitable. And with multiple big betting companies entering the space, a windfall of profits is far from guaranteed. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns and recommends Flutter Entertainment and Flutter Entertainment PLC. The Motley Fool has a disclosure policy.

Premium Investing Services

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