@hank : I came across this note Sunday morning, Seeking Alpha, & wondered if you would care to comment as you use & or own DKNG ?
: Vivid Seats is due to start trading next week after the SPAC deal with Horizon Acquisition Corp. was approved. The stock will get attention within the sports betting sector after DraftKings (NASDAQ:DKNG) agreed to make an undisclosed investment. As part of the deal, DraftKings has an option to sell its Vivid Seats stock back for $9.77 a share a year after the merger is completed.
Thanks, Derf
Comments
Michigan legalized online gaming early in 2021. I’ve mixed feelings. The thought of some father squandering away the rent money spinning a roulette wheel or playing black-jack online is not a little troubling.. This (legalization) is part of a trend nationwide aimed at increasing state revenues. My “interest” has been limited to small wagers on NCAA basketball games being watched evenings during our darkest winter months. Looked at 2 or 3 betting sites and thought for what I wanted DKNG was tops. It’s a smooth operation. What’s appealing is the ability to buy and sell positions while the game is in progress. ISTM That to large extent you’re basically wagering against the “crowd” following along at the same time. I ended the season with a profit of $8.00 (yes - eight dollars). Have done somewhat better with the stock.
After moving to Fido it became possible to acquire individual stocks. So I plunked a very small amount down on DKNG - which I still own. One allure of having some individual stocks is they often move opposite the major indexes, actually serving to mitigate daily volatility inside a predominately fund centric portfolio. The biggest drawback is their wild fluctuations over time. (See @Crash’s recent post). Charts showed DKNG had topped $70 earlier in the year. It had fallen to the mid $40s when I picked a bit up. So it’s ranged from over $70 to below $40 this year. It’s probably the smallest investment (amount) of anything I own.
Since announcing an attempt to acquire a large European gaming company a month or more ago, DKNG has been in a downward slide - mid $40 range at present. Here’s a FT LINK to that takeover story - not yet completed. Here’s an alternative STORY if unable to link the FT article. (It’s normal for acquiring companies’ stock prices to fall initially.) A short seller with a good track record (for integrity) broadsided DKNG in June with a report one of their recent acquisitions had ties to organized crime in Europe. That’s the main reason the stock fell back than.
I wasn’t aware of the SPAC deal you referenced. However, it’s likely part of a a “dog-eat-dog” battle going on among the top betting sites in the U.S. There are more than a half dozen players, with DraftKings and Fan Duel neck & neck. MGM in pursuit. It’s thought the market will only support about 3. So the fight is over market dominance before it’s too late. That may shed light on your story. There is an investigation into the charges against DKNG by the U.S. government - not sure which agency. And a big unknown is NY state. Apparently they will allow only some players to operate there when online gaming starts. The big fear is that taxes on their profits will be so high the companies won’t be able to operate profitably.
Not sure if these companies qualify as “meme“ types - but people should be aware they are wildly popular among small retail investors and, hence, possibly overvalued. Cathie Wood picked up a slug of DKNG about the time I acquired my holding.
Had to chime in. I do NOT gamble with a phone app. I AM a long time casino gambler.
In Michigan, the state's take is 8.26%!!!! They are making an obscene amount of money. What this means from an investment perspective, is that ALL states, sooner or later, will legalize this form of gambling. It's just a matter of time. They money is too enormous.
There will be incredible consolidation because as of now, there's about a dozen different apps. That's unsustainable.
That said, I agree with Hank that there will be some ruined lives over this.
and so it goes,
peace and wear the damn mask,
rono
DFKG is up nearly 8% in pre-market trading this morning. The buyout bid has really hammered their stock the past 1-2 months. Still, with football season in high gear, I was surprised how far it slid.
Cathie Wood is a major holder through her ARK funds. Before buying a small sliver, I looked at its largest shareholders, with VG and TRP near the top - though TRP sold some shares off earlier this year.
As far as using their app - I haven’t accessed it since last March, as basketball is the only aspect that interests me.
Link to Story
Edit : DKNG finished up 4% for the day.
https://defector.com/sports-betting-industry-finally-predatory-enough-to-make-money
“The thing that we underestimated — that I think is going to be a benefit for all these companies for a while anyway — is what bad bettors the US gamblers are.”
The companies will make out like bandits, for sure -- as will the sports leag,er businesses -- but the end customer likely will be the ones suffering, throwing good money after bad when many can ill afford to do so. It's just another way to get people's hopes raised.
Throw in shenanigans like we've seen in recent weeks with the NFL and there's probably a few class actions shaping up against either the betting companies or the league for 'rigging' things -- like not disclosing a player on their official injured list while still allowing people to bet on their performance thinking they were going to be active that week.
There’s a boatload of bells & whistles on those sites. All designed to draw
suckersspeculators into the higher profit areas - everything from “spinning” a digital roulette wheel to wagering whether or not “Player A” will sink his next free throw. Outrageous really.Personally, I only wager a few dollars on which team will win at the end of the game. If playing in that manner it’s important to find games that have close point spreads, (I have $1 riding on the Bulls against the Hawks tonight. Might change sides or add a couple bucks depending on the early going.) With me it’s all about enjoying the game a little more. I don’t watch or wager on college sports and I’m aghast at the high bucks paid to college coaches as well as the monetary incentives to players. Sad commentary on state of education.
BTW - I’ve been using “Points Bet” (a smaller outfit) instead of DKNG. The latter has become so loaded up with the kind of garbage the FT article mentions that it’s nearly impossible to navigate their site for folks who just want to place a dollar or so on a specific game outcome.
Cheers.