DraftkKing stock recently popped on news the ARK Invest next generation etf arkw purchase shares
and joining me now with insights on the outlook for online sports gambling is Nick Groos Analyst
at ARK thanks for joining me today Nick thanks for having me so first nick we can get into draftkings
specifically in a little bit but let's take a step back and talk about the online sports gambling
market and the potential for growth here it still seems like we're in very early innings with
this theme absolutely and you know when we first started looking at the online sports betting space
uh the realization we came to is this is a supply and demand issue in that there is definitely a ton
of consumer demand but the supply has been held up by regulation and i would just add there that
regulation is starting to favor more and more online sports betting so when you look at it as
just a supply and demand issue this is definitely still very much early days
and you know even though the pandemic squashed sports for quite a while seems like interest in
online betting surged in 2020 so this theme appears to not only have benefited from the
pandemic with esports and people having to stay indoors and figure out new hobbies but it also
seems like it could be said to benefit further as the economy continues to reopen as well with
more sporting events taking place what are your thoughts on that absolutely and you kind of nailed
it there this year was absolutely disastrous for for sports uh you had cancellation of tournaments
you had shortened seasons but what we actually saw was an enormous growth in online sports
betting we grew from 2019 uh 13 billion dollars in handles so that's just the total sum of all bets
in 2019 was 13 billion and that grew to actually 18 billion in 2020 despite the terrible year that
sports as a whole had so there's definitely demand there for for online sports betting
and that 18 billion it breaks down to around 1 billion in total revenue for 2020 we expect
that to almost 18 x in terms of we're going to go from 1 billion in revenue in 2020
to almost 18 billion in revenue by 2025 that's how much demand there is for online sports betting
so just a couple of years time and so you talked about the supply and demand issue so where do we
stand now on more states legalizing online sports betting what specifically are you watching on that
front so we're watching how states are approaching this issue and we've seen over the past few weeks
a number of very large states texas and new york to kind of be specific come out in favor of you
know passing legislation that would allow for online sports betting and then i would break it
into specifically mobile sports betting is really where you're starting to see a ton of engagement
uh just because of the stickiness and convenience that that offers to bettors
so talking about mobile when it comes to draftkings in particular what do you think sets
that business apart from others in this space sure uh when we look at draftkings in the
space overall we view this as a technological problem right you need to offer bettors the most
convenient and easy way to place bets um and when we looked at draftkings what we saw was an amazing
technical stack in terms of the rest of the competitors have not yet caught up to draftkings
in terms of the technical innovation that they're providing to mobile sports bettors
and that's really what it excited us about draftkings as compared to other competitors
now what other innovations are in the pipeline for draftkings and others in this space that's set to
fuel growth beyond this year you know beyond the pandemic as as the economy continues to reopen
what's going to keep people in that online sports gambling mode and and pick up the pace really well
certainly once we get back into full swing of you know live sports that's going to add fuel to this
fire um increase you know regulation in terms of you know we're going to see new states coming
out in favor of this but then really when we're talking you know five ten years down the road
how does uh you know sports betting grow uh we see uh the esports arena to be something that really
has yet to be even tapped um at all uh this is an amazing opportunity uh for this for this area if
you're talking about total revenues the online gaming industry so this is just video games now
brought in roughly 175 billion dollars in 2020 that's more than movies music you know every
other entertainment category combined really and so that's an enormous opportunity for sportsbooks
uh to enter into and esports is you know a growing segment of that online gaming space yeah and who
knows maybe uh some of the retail investors who tried out gamestop might be interested in
doing the esports betting we'll have to see but we can't talk about online sports betting without
mentioning the super bowl of course what kind of impact do you think that this year's super bowl
is going to have uh on on sports betting you know i've heard draftkings are set to have some big ads
what kind of interest do you think that this event could spark and help fuel for the remainder of the
year just recognition of you know what's happening in the space um and i think you know that takes
time and it takes events like the super bowl like the college football championship to really bring
awareness to consumers that have not yet realized that mobile sports betting is actually an offering
in their state um you know this is a marketing effort one and then two you know long term
uh just allowing easy access to place bets before the super bowl after the super bowl
during the super bowl this is really what these type of events offer to the online sports betting
space all right great well nick thanks so much for helping us learn more about what's driving
the growth in the online sports gambling industry we really appreciate it thank you
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