DraftKings (DKNG 6.41%) investors were hoping the sports betting company would get back into the game during the Spooky Month, following a September that saw the stock lose 22% of its value. There wasn't any relief for them, however, as the shares continued their slide in October (albeit at a narrower decline of 18%).
As in the preceding month, DraftKings struggled with smaller but no less determined competitors. And like other sports betting companies, it suffered some fallout from a high-profile gambling scandal.
Coming after the Kings
DraftKings markets itself quite aggressively. As recently as the end of September, it secured a high-level advertising deal with media company Comcast's NBCUniversal to feature its branding within the broadcaster's live sports programming.
Image source: Getty Images.
It's not the only game in town for such deals, however. Towards the end of October the National Hockey League (NHL) inked a multi-year marketing arrangement with two of the aforementioned competitors, prediction markets operators Kalshi and Polymarket.
Hockey is not as hotly popular as pro football and this deal is narrower than the DraftKings/Comcast pact (which covers pro sports like PGA Tour golf, Premier League soccer, and the National Basketball Association). Still, it served as a bracing reminder that energetic dogs are nipping at DraftKings's heels.
Compounding that, Kalshi founder and CEO Tarek Mansour posted on social media platform X that his company had "recently" raised $300 million at a $5 billion valuation.
DraftKings is attempting to get in on the prediction markets action. On the same day the Kalshi and Polymarket contract with the NHL was disclosed, the company announced that it acquired privately held Railbird Technologies.
DraftKings didn't state how much it was paying for the new asset, although athletics business site Front Office Sports, citing an unnamed "source familiar with the deal," said it was on the hook for up to $250 million when incentives are factored in. To some investors, perhaps this looked like a pricey buy that's too little, too late.
NASDAQ: DKNG
Key Data Points
A reputational problem
DraftKings also had to absorb some reputational damage inflicted on the wider sports wagering industry.
Shortly after those deals were announced, coach Chauncey Billups of the NBA's Portland Trail Blazers, then-active player Terry Rozier of the Miami Heat, and onetime Cleveland Cavaliers player Damon Jones were arrested as the result of two Federal Bureau of Investigation (FBI) probes into illegal sports betting and the rigging of poker games.
This highlighted the seedy side of betting, an image DraftKings and its peers labor hard to dispel. But being associated, however legitimately, with the activity helped push the already-out-of-favor stock down further in price.
