DraftKings Suffers Setback in Massachusetts, its Home State

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Posted on: July 30, 2020, 10:15h. 

Final up to date on: July 30, 2020, 10:15h.

DraftKings (NASDAQ:DKNG) inventory traded decrease Thursday, extending a slide that’s seen the identify surrender nearly 5 % over the previous week, after the Massachusetts State Senate balked on the inclusion of a sports activities wagering proposal included in a broader financial growth bundle.

Inside DraftKings Boston headquarters. The corporate was stung in its residence state after the Senate there rejected a sports activities betting proposal. (Picture: Boston Globe)

That’s a stinging rebuke for DraftKings in its personal yard. The corporate was based and is predicated in Boston. Shares of the sportsbook operator have been decrease by as a lot as 3.5 % earlier in at the moment’s session, however these losses have been trimmed with the inventory decrease by 1.23 % at this writing.

H.4879, “An Act Enabling Partnerships for Development,” which contained provisions for legalizing sports activities wagering within the Bay State, just lately sailed by way of the state Home, however the Senate stripped the sports activities betting element, primarily ending any probability Massachusetts will legalize betting on sports activities in 2020.

Nonetheless, some analysts, as they principally have since DraftKings went public in late April, stay bullish on the inventory.

Whereas the Senate’s failure to legalize sports activities wagering removes a near-term optimistic catalyst, we’re nonetheless optimistic sports activities betting will get legalized in Massachusetts subsequent yr,” stated Morgan Stanley analyst Thomas Allen.

Massachusetts is the biggest state in New England and seen because the holy grail of sports activities betting alternatives within the area. Of the six states within the space, solely New Hampshire and Rhode Island presently permit sports activities wagering.

Penchant for Political Sensitivity

DraftKings isn’t the one gaming offender on the Massachusetts Senate information. Penn Nationwide Gaming (NASDAQ:PENN), the operator of the Plainridge Park On line casino (PPC), can also be buying and selling decrease at the moment.

Whereas the every day fantasy sports activities (DFS) juggernaut clawed again a lot of its intraday loss seen earlier Thursday, at the moment’s value motion in DraftKings inventory reminds buyers that the thesis concerning elevated state-level legalization of sports activities betting cuts each methods.

This yr, market contributors seem comfy bidding on-line on line casino and sportsbook operator equities larger on hypothesis extra states will approve one or each of these endeavors to lift money following the coronavirus pandemic. The danger is, as Massachusetts highlights, when issues don’t go the operators’ means, buyers pay the value.

DraftKings has barely greater than three months as a public firm underneath its guess and the inventory is already exhibiting it’s politically delicate. Final month, the inventory slipped after a invoice that will have paved the way in which for on-line sports activities betting in California in 2023 was scrapped. Earlier this week, on-line sportsbook equities, together with DrafKings, have been dinged when Illinois resumed the requirement of in-person registration for cellular betting websites, a mandate that can power Chicago-area gamblers to drive a whole bunch of miles to finish that registration.

Massachusetts not a Misplaced Trigger

The excellent news for DraftKings, Penn and others wanting Bay State sports activities betting licenses is that the difficulty isn’t useless.

Morgan Stanley’s Allen believes the latest sports activities betting effort suffered from dangerous timing and poor construction in the way in which it was proposed, not as a result of the Massachusetts Senate opposes the concept. He believes the state will cross sports activities betting early subsequent yr.

Different consultants consider it’s potential sports activities wagering is authorised there later this yr and that it will likely be spring 2021 when the primary authentic bets are positioned.

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