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.
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.
