DraftKings has been battling competitors, like Flutter Entertainment Plc’s FanDuel, for market share in states where sports gambling is legal. The two companies account for roughly two-thirds of online sports bets in the U.S., according to Bloomberg Intelligence.
Share Run-Up
FanDuel has made similar moves with sports personalities, announcing an official partnership with punter-sports analyst Pat McAfee in July.
The huge run-up in sports betting shares has some analysts worried the nascent industry may be experiencing a bubble.
Barry Jonas, an analyst with Truist Financial, initiated coverage of DraftKings on Wednesday with a hold recommendation. Investors are chasing a business that could generate $1.2 billion in annual profit. But that “could be nearly a decade in the making with years of losses before then,” he said.
“While DraftKings could still be a long-term leader, its stock price leaves little room for error,” Jonas said.
The NBA has loosened its policies regarding sports-betting businesses and team
investors. Houston Rockets owner Tilman Fertitta said his sports-betting business, Golden Nugget, was initially forbidden from taking bets on the NBA. That ban has been narrowed to just Rockets games.
In response to a question about Jordan’s DraftKings investment, a league spokesman said: “NBA team investors, including governors, are permitted to have involvement with sports betting and fantasy sports businesses, subject to safeguards required under league rules to prevent actual or perceived conflicts of interest.”
--With assistance from Devon Pendleton.
This article was provided by Bloomberg News.