What happened
Shares of sports-gambling company DraftKings (NASDAQ: DKNG) are up over 10% as of 10:35 EDT on Tuesday after an analyst maintains a buy rating on the stock.
So what
Benchmark analyst Mike Hickey updated his rating after Illinois governor J.B. Pritzker reinstated an executive order allowing bettors to sign up for sports betting accounts and place wagers remotely. DraftKings entered Illinois with a retail sportsbook presence at Casino Queen in East St. Louis earlier this month. The executive order allows customers to create an account and make bets without having to physically visit the casino.
Image source: Getty Images.
Now what
Analyst Hickey believes that Illinois is a more-than-$700 million opportunity, and thinks that DraftKings' third quarter revenue will jump 69% sequentially over the second quarter. He has a $45 price target on the stock, representing a 25% increase from Monday's closing share price.
The company's share price has more than doubled since its $17 initial public offering on April 24, 2020, through a merger with a special purpose acquisition company (SPAC).
DraftKings CEO Jason Robbins believes growth opportunity will come from in-game betting, noting that "in-game is about 75% of the revenues at sports books" in the U.K. The ability to register players remotely should result in a boost to user growth. Casino Queen is approximately a five-hour drive from the Chicago metro area, where 75% of the state's population resides. The governor's order makes it much easier for those potential bettors to become DraftKings players.
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