DraftKings has its eyes on becoming a sports media giant

Sports betting (and cryptocurrency exchange) companies are padding up their resumes.

DraftKings, one of America’s largest sports betting apps, is making major moves in growing its sports media empire.

DraftKings is a leader, not a follower

Within 9 years, DraftKings grew from a fantasy sports app to a $18b sports betting giant — all thanks to a 2018 US Supreme Court ruling giving states the ability to legalize sports betting.

• $DKNG grew over 4x since Dec. 2019 after going public.
• But then so did competition — with casino operators, like MGM ($MGM) and Penn National Gaming ($PENN), launching their own sports betting apps.

There’s one way to fend off competitors: Differentiate yourself. DraftKings is doing so by entering the media business. Over the past 3 months, DraftKings has made several media moves including:

• Acquiring VSiN, a media sports radio/TV streaming platform, for $70m.
• Partnering with SLING TV and DISH Network on exclusive streaming channels and integrations.

In 2020, Penn National Gaming, in a similar move, acquired a 36% stake in Barstool Sports for $163m.

There’s money in media

According to Sportico, DraftKings hasn’t announced its media strategy, but some are speculating it could build or buy a streaming service. Expansion into the sports streaming business would:

• Increase revenue streams beyond sports betting into advertising and subscription services.
• Improve customer engagement — which could increase spending on its sports betting apps and reduce customer acquisition costs.

For investors: DraftKings has a vision

Like other growth stocks and sports betting companies, DraftKings had fallen 37% from its March highs. Despite receiving buy recommendations from Goldman and other analysts in recent weeks, investors have shunned away from the investment and for good reasons…

• Inflation pummelled growth stocks in the past few months and the threat of this high inflation persisting lingers over stocks.

The Joe’s Take: Developing a streaming service is both expensive and ambitious but if it succeeds, DraftKings could have a big advantage in the increasingly competitive sports betting industry..

On another note: Coinbase ($COIN), the cryptocurrency exchange, is also interested in launching its own media arm according to Axios.