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DraftKings Shares Jump on Official NFL Sports Betting Partnership Deal

Oppenheimer analysts estimate DraftKings could achieve a 30% share of the multi-billion dollar market in U.S. sports gaming revenues.

DraftKings  (DKNG) - Get DraftKings Inc Class A Report shares jumped higher Friday after the group was named, along with rivals Caesars Entertainment  (CZR) - Get Caesars Entertainment Inc Report and FanDuel, as the official sports betting partner of the National Football League.

DraftKings, which won the right to integrate its sports betting content directly into NFL Media's mobile app and website, also renewed its contract to promote the league's lucrative daily fantasy sports contests. Caesars, for its part, becomes the NFL's first-ever casino sponsor following the league's decision to allow the Oakland Raiders to re-locate to Las Vegas in January of last year. 

“The way fans consume sports years from now will look drastically different, and it will be due in part to forward-thinking collaborations like our expanded relationship with the NFL,” said DraftKings CEO Jason Robins. “We share the same vision as the NFL on fan engagement and believe this agreement will lead to new innovations that will ultimately enhance both the product on the field and on the screen.”  

DraftKings shares were marked 3.3% higher in early trading Friday to change hands at $59.20 each, a move that would extend the stock's year-to-date gain to around 27.5%.  Caesars Entertainment shares, meanwhile, rose 1.3% higher to $94.20 each.

"As the sports betting landscape has continued to evolve in the United States, we have been thoughtful with our strategy and are excited to announce three partners who share the NFL's vision and goals," the NFL said. "Working closely with Caesars, DraftKings and FanDuel, we will provide fans new and different ways of interacting and engaging with the sport they love."

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Sports betting shares have been rising steadily since the Supreme Court struck down a two-decades old law in 2018 that prohibited New Jersey from allowing sports betting at state casinos.

The ruling paved the way for U.S. states to challenge the 1992 Federal Professional and Amateur Sports Protection Act that effectively allowed only Nevada, Oregon, Delaware and Montana to offer full or limited facilities in the $150 billion global sports betting market.

Analysts at Oppenheimer estimate legal sports gaming in the United States will grow 34% a year to around $15.3 billion by 2028.

Earlier this week, legislatures in Maryland and Arizona passed legislation that will allow online sports betting, while New York Governor Andrew Cuomo said earlier this month that he reached a compromise with state lawmakers to mobile sports betting that will likely begin early next year.

DraftKings, which combined with Diamond Eagle Acquisitions and SBTech in a $2.7 billion SPAC deal last April, has leveraged that expansion better than most, recording a 30% increase in so-called monthly unique players last year and raising is 2021 revenue forecast to between $900 million and $1 billion.