DraftKings Could Get Canadian Boost, Says Analyst
Posted on: February 19, 2021, 01:45h.
Last updated on: February 26, 2021, 11:41h.
DraftKings (NASDAQ:DKNG) is one of the US-based gaming companies that stands to benefit from the legalization of single-game sports wagering in Canada, according to one Wall Street analyst.
Earlier this week, the House of Commons resoundingly passed Bill C-218. It’s legislation that allows Canada’s 10 provinces and three territories to roll out betting on individual sporting events. Companion legislation in the form of Bill C-13, which would legalize single-game betting at the federal level, is scheduled for a second reading in the House of Commons on Friday and is expected to easily pass, too.
With strong brand recognition and an established footprint in the country, DraftKings could be a winner as the country modernizes its sports wagering offerings.
We believe DraftKings, operating Daily Fantasy in Canada for nearly a decade with a large customer database, is well- positioned if favorable regulation for private operators occurs,” said Oppenheimer analyst Jed Kelly in a note to clients on Friday.
DraftKings is currently live and legal in 13 US states. But because of restrictions in Mississippi and New York, that figure is 11 for mobile wagering. Canada is home to 37.59 million citizens. Assuming full access, it would be the largest North American market for DraftKings by population.
Good Timing for DraftKings
Kelly’s comments are contributing to a nearly five percent gain for DraftKings stock today, indicating investors are warming to the idea of what could be a lucrative opportunity set in Canada.
Adding to the north of the border allure for sportsbook operators are expectations that single-game sports betting will be live there by the start of the 2021 NFL season. Although Canada has its own football league, the NFL is popular there, as the league has multiple franchises that play in close proximity to the US border with that country.
Getting to live status in advance of the 2021 NFL campaign is critical for Canada’s revenue-generating ambitions because football is the most wagered-on sport in North America. It positions the country and operators to benefit from the next Super Bowl. For Super Bowl LV earlier this month, sportsbooks in New Jersey and Nevada – the two largest US sports wagering markets – handled a combined $253.5 million in wagers.
Ontario, Canada’s most populous province, will be a marquee Canadian market for DraftKings and others.
“We see Ontario offering the most immediate opportunity, where it recently included legal language in its annual budget to allow private operators to offer Online Sports Betting and iGaming products,” said Oppenheimer’s Kelly.
Sports Betting Winners
Perhaps no operator is poised to benefit from Canada’s new sports betting policy more than Score Media and Gaming Inc. (OTC:TSCRF), the sports wagering company also known as theScore.
Based in Toronto, theScore is a homegrown entity with strong market share and name recognition in the country. That’s to the liking of Penn National Gaming (NASDAQ:PENN) investors, too, because that company owns 4.7 percent of Score Media equity.
Other potential winners include Caesars Entertainment (NASDAQ:CZR), which owns an eponymous casino in Windsor, Ontario, Bet365, and FanDuel.
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