DraftKings Stock Called Top Pick by Loop Capital on New York Online Potential

Posted on: March 22, 2021, 07:12h. 

Last updated on: March 22, 2021, 10:38h.

DraftKings (NASDAQ:DKNG) stock earned more praise today from one of its biggest supporters, as Loop Capital reiterated a bullish view on the sportsbook operator.

DraftKings stock
New York Gov. Andrew Cuomo. If he signs off on mobile sports betting, it could be huge for DraftKings, says Loop Capital. (Image: CNN)

Research firm Loop Capital reminds investors of its “buy” rating on DraftKings and its top pick status, citing massive potential in New York.

Based on New Jersey’s sports betting and iGaming GGR per capita last year, we estimate the online gaming opportunity in New York could be roughly $3 billion,” said Loop Capital in a note to clients.

New York is the fourth-largest state by population and is the only one of the top four with some form of legalized sports betting. Currently, the state permits sports wagering at upstate land-based casinos. But there is no mobile or online wagering there.

The lack of mobile betting sends many New York gamblers to New Jersey to make bets by smartphone, explaining why that state is now the sports betting mecca of the US.

Benefit for DraftKings Stock if Change Arrives

To date, the largest state to sign off on mobile sports betting in Illinois, where DraftKings is also operational. However, New York has nearly seven million more residents than its Midwest counterpart, underscoring investors’ enthusiasm for gaming companies with exposure to the latter.

It appears Loop Capital’s New York-inspired call on DraftKings is well-timed, because last week, lawmakers in both legislative chambers revealed budget proposals for the 2022 fiscal year, and those bills contain online sports betting language. Embattled Gov. Andrew Cuomo (D) previously signaled he’s warming to the idea of mobile sports wagering in the state.

Adding to the possible upside for DraftKings stock by way of New York is timing. State Sen. Joseph Addabbo (D-Queens) recently told Casino.org he’s confident mobile sports betting could launch this year, meaning operators there could capture revenue from some or all of the 2021 football season.

“We are especially optimistic about the market opportunity potential in NY for our top pick, Buy-rated DKNG, which has already secured market access rights through its partnership with del Lago Resort & Casino,” said Loop.

New York Mobile: 2021 Sports Betting Golden Goose

Some new states are expected to enter the live and legal sports betting fray this year, and several others are forecast to at least approve it. However, New York signing off on mobile betting would likely be one of the biggest 2021 legislative stories.

That’s particularly true because the issue is unlikely to see the light of day in California until the 2022 mid-term elections. While there’s momentum in Texas, it remains a longshot there because of opposition by Lt. Gov. Dan Patrick, and sports wagering faces an equally long legislative road in Florida.

Those are the three largest states by population, leaving New York mobile/online wagering to move the needle among major sports betting political accomplishments this year.

Of the 24 analysts covering DraftKings stock, 16 have “buy” ratings on the name, while seven have the equivalent of “neutral” grades. One rates it a “sell.”