DraftKings continues to bet on itself

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If there is a way to reach the perfect audience of players, chances are that DraftKings (NASDAQ: DKNG) is already there or lying nearby ready to pounce. Popular provider of fantasy sports games and live sports betting acquires Vegas Sports Information Network (VSiN), a broadcast platform and content creator for the betting industry.

Terms of the deal were not disclosed, but it’s easy to see why this is a smart move. DraftKings currently offers mobile or retail sports betting in 14 different states, and this will continue to grow with the expansion of legal live event betting in that country. Between his fantastic sports competitions and his sports betting businesses, he will reach the ideal demographic with VSiN viewers. DraftKings should also help extend the visibility if not the distribution of VSiN itself. There are winners and losers in most bets, but this is a win-win bet.

Image source: Getty Images.

Bet on the house

VSiN was started just four years ago by Brian Musburger, nephew of famous sports commentator Brent Musburger. Brent retired after 50 years of hosting major sporting events to join the family business. The platform which started with just five hours of daily programming is now down to just over 18 hours of live content per day.

Matchmaking makes sense, and you don’t have to be a seasoned better to see it happen. Boston-based DraftKings opened an office in Las Vegas last year, and VSiN – at the right price – is the perfect platform for its master plan.

DraftKings has negotiated agreements with sports leagues, teams and networks to be the exclusive partner of fantasy sports. It may sound innocent enough. Your friendly fantasy football league doesn’t seem like a gateway to high stakes gaming. It is always a foot in the door for DraftKings to nurture confident sports fans in its higher margin field of sports betting offers.

DraftKings is definitely playing the role of a successful player. Pro forma revenue grew 98% in its most recent quarter. He started this year with 1.5 million players, 44% more than he had served a year earlier. Average revenue per item is the real star metric here, up 55% from last year.

Growth investors have had no problem preparing for DraftKings since it hit the market at $ 17 in April. The stock has more than tripled in the 11 months since its IPO. The future was bright before VSiN entered the scene. The momentum is for states to ease restrictions on conventional betting in order to generate the necessary tax revenue. With VSiN’s growing audience now on its side – and the clear paths to build the content platform’s audience – this makes perfect sense. You don’t want to bet against DraftKings at this point. It’s playing this game on a different level. That’s where the puck goes, and this week’s VSiN deal looks like another winning score for DraftKings.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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