Published: May 9, 2022

California dreaming for DraftKings, FanDuel and Barstool with sports betting teed up on the ballot

There is growing buzz in the sports betting sector about voters in California potentially approving a ballot measure in November sponsored by DraftKings, BetMGM and Flutter Entertainment's FanDuel over a competing measure that would limit in-person sports betting at tribal casinos and four race tracks.

Penn National Gaming and Wynn Resorts are also supporters of the California sports betting initiative and have highlighted the long-term opportunity.

On the recent DraftKings earnings call, CEO Jason Robbins said the company was very excited by the momentum for sports betting in California, which he called a significant revenue and adjusted EBITDA opportunity for the company. Robbins noted that California has approximately 12% of the United States population and is the fifth largest economy in the world ranked by GDP.

Also weighing in, Roundhill Investment's Brian Lichtor said there are significant implications for the entire online sports betting industry at play, with California representing a material percentage of the overall total addressable market for the North American market.

A potential wildcard in the mix is litigation if voters in California approve both ballot measures, instead of just one.

DraftKings is down 53% year-to-date and is 80% off its 52-week high with investors bailing out on high-growth companies that are burning cash. Analysts are still generally positive on the potential for DraftKings to see the heavy investments in customer acquisition pay off over time with contribution profits.

While FanDuel owner Flutter Entertainment has also seen a big share price drop on the London Stock Exchange, the company noted with its recent earnings report that this year's Super Bowl saw FanDuel bring in the most new customers in its history and the sports betting powerhouse brought in 19M wagers on the NCAA March Madness basketball tournament.

Despite the soft U.S. IPO backdrop, there is still talk that FanDuel could be set free with its own listing in the U.S.

https://seekingalpha.com/news/3834718-california-dreaming-for-draftkings-fanduel-and-barstool-with-sports-betting-teed-up-on-the-ballot

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