DraftKings Stock Stung by Illinois Registration Decision, MLB COVID-19 Postponements
Posted on: July 27, 2020, 09:00h.
Last updated on: July 27, 2020, 01:22h.
Shares of DraftKings (NASDAQ:DKNG) are slumping Monday, with the stock being hit on multiple fronts, including Illinois political decisions and postponements of Major League Baseball (MLB) games because of COVID-19 outbreaks among players.
Once-hot DraftKings stock is lower by nearly seven percent at this writing. The name set a torrid pace following its April 24 debut, but since early June, it’s scuffling, having shed about 22 percent. Declines of 20 percent or more are considered bear markets.
One drag on DraftKings stock Monday is a decision by Illinois Gov. J.B. Pritzker (D) to not extend an executive order requiring in-person registration for mobile sports wagering accounts.
That means that as of today, Prairie State sports bettors need to drive to a casino to sign up for online and mobile accounts. The problem is there are just two operational, physical sportsbooks in the state – Rivers Des Plaines and Argosy Casino in Alton.
Chicago-area gamblers looking to bet online with Argosy, DrafKings, or FanDuel need to trek 300 miles to activate their accounts — a trip that’s likely unappealing, given the time commitment and fuel costs. Worse yet for DraftKings and online rivals is that the in-person registration mandate is in effect indefinitely.
Traders are also departing DraftKings on news that some MLB games are being postponed because os players contracting the coronavirus. That potentially deals a blow to sportsbook operators’ hopes to bolster revenue after months of a limited US sports slate.
Earlier today, the Miami Marlins postponed their home opener against the Baltimore Orioles after eight Marlins players and two coaches tested positive for the virus, bringing the number of infected players and staff on the team to 14. That news also led to the postponement of the New York Yankees/Philadelphia Phillies game because the Phillies were the Marlins’ last opponent.
Those postponements come just days after MLB finally got its 2020 season off the ground, and are sending shockwaves throughout the sports betting equity landscape today, as both MGM Resorts International (NYSE:MGM) and Penn National Gaming (NASDAQ:PENN), among others, are joining DraftKings to the downside.
The loss of baseball games for sportsbook operators is tangible. DraftKings said last Thursday’s game between the Yankees and the Washington Nationals was its most-bet baseball tilt on record, topping game seven of the 2019 World Series.
It’s not all bad news for DraftKings stock today. Oppenheimer analyst Jed Kelly said the inclusion of sports wagering in Massachusetts’ recently proposed economic development package is a positive for the operator.
We see the current proposal as favorable to DKNG given that, if the proposal passes, MA would essentially become the first untethered online sports betting (OSB) state, meaning mobile operators such as DKNG wouldn’t need to be tied to a retail establishment,” said the analyst.
DraftKings is based in the Bay State, which is home to three land-based casinos — Penn National’s Plainridge Park, MGM Springfield, and Wynn’s Encore Boston Harbor.
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