COVID-19 has definitely accelerated the shift to online gaming. Whether it be casinos or daily fantasy sports like Draft Kings.
Draft Kings is a tough one for me. I don't play much myself anymore, but I used to be BIG into daily fantasy when it came out in 2013-2014.
Similar to poker, the sharks tend to eat the fish. Recreational players move on from the game, most do anyways. This is because 95% or more of the money heads back to the major winners (sharks.)
The pandemic has accelerated online gambling, and it remains to be seen if it's sustainable once the pandemic subsides and casinos/live sports books etc open back up.
Over the past 3 years, Draft Kings has a compound annual growth rate of 19% on revenue, and is trading at around 60 times trailing sales. This is an extensive premium to pay, and in order to justify that premium, the company is going to need to not only come out of this year with some rapid growth due to the pandemic, but continue that growth moving forward.
I'm not all in on this company, but I'm also not completely out either. They've signed some pretty key deals recently that is going to allow them to get the brand in front of more consumers, allowing them to get new players cheaper.
However, in a group of 20 or so people I know of whom I used to regularly discuss daily fantasy with back when we played, only 1 of them is still active. I am fully confident that Draft Kings will be around in 10-20 years. However, existence doesn't justify a solid investment. Consistent growth over that period is the thing I'm more concerned about.
I'd be in wait and see mode. I would hate to pay this premium due to anticipated growth because of COVID-19, only to have player base and growth subside as brick and mortar casinos open up and people who simply needed a gambling fix shift away.