Giants Deal Hastens Gargantuan Move by DraftKings Stock
Posted on: September 16, 2020, 12:18h.
Last updated on: September 16, 2020, 02:14h.
DraftKings (NASDAQ:DKNG) is extending a monster run, trading higher by nearly 10 percent Wednesday following news of a multi-year agreement with the NFL’s New York Giants.
Accords between professional sports franchises and sportsbook operators are becoming more common as the industry becomes legitimized and as more states legalize sports wagering. It’s also not unusual for shares of gaming companies to rally on the related news.
But today’s move in DraftKings stock isn’t standard fare and likely underscores the potency of reaching an agreement with a New York team. The equity is on pace for one its largest volume days since its April 24 debut and is extending a run that’s seen it surge more than 30 percent in a week.
As part of the pact, DraftKings will be the official daily fantasy sports (DFS), iGaming, and sports betting partner of the Giants. Financial terms weren’t disclosed.
The arrangement grants DraftKings access to official Giants marks and logos, in addition to a first of its kind virtual SportsLounge open on Giants’ game days, providing attendees with unique and innovative ways to engage on all DraftKings platforms,” according to a statement.
In New York, sports wagering is only permitted at some casinos located in the northern part of the state, far away from the major population artery of the New York City area. However, MetLife Stadium, the Giants’ home turf, is located in New Jersey, the largest sports betting market in the country.
Data Say Deal Makes Sense
As the move by DraftKings’ stock today confirms, it’s usually a positive when a sportsbook operator can develop a relationship with a New York team, particularly one in a major sport like football.
Data confirm as much. DraftKings says it offers gamblers the opportunity to wager on 700 teams across its sportsbook platforms. But the Giants rank in the top 40 for both handle and wagers placed. That jibes with football’s status as the most-bet sport in the US.
As a historical aside, the relationship between the Giants and a sports betting company is interesting for at least two reasons. First, prior to the 2018 Professional and Amateur Sports Protection Act (PASPA) ruling, the NFL was famously anti-gambling.
Second, the Mara family, which controls the Giants, has ties to the New York horse racing industry. In fact, patriarch Tim Mara used proceeds from his days as a bookmaker at Empire State tracks to start the football franchise.
DraftKings and the Giants have had a relationship for some time. But the accord announced today is more expansive.
Not only will the gaming company’s logo be splashed across MetLife Stadium, but there are media elements to the deal that could, in part, explain some of the move in DraftKings stock today.
For example, the sportsbook operator will be recognized as the Giants’ official partner on three New York television networks and the WFAN sports radio network. That’s important because the city is the largest media market in the country.
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