DraftKings (DKNG)

Complicated business, changing dramatically right now. Prediction markets are providing a very competitive way for people to lose their money. Should have some incumbent advantage, but he doesn't know what's going to happen.

What really put him off (and off FLTR) was that if you're a successful gambler, you can be cut off from placing bets. If you're not good, they'll encourage you to gamble more. Could eventually come under regulatory scrutiny for being predatory.

Just because a stock's fallen, doesn't always mean it's a good investment.

Is -31% this year. They report a few weeks ago good numbers, but a much-weaker-than expected forecast.

 It reports on Thursday. Shares are so low now. It needs California and Texas to allow gambling.

Likes the company but without gambling in Florida, Texas and Californina it's stuck in the wilderness.

Their outlook disappointed. He isn't selling it, but if they don't deliver, he won't keep it.

Is -6.92% in one year. Ever since rallying in September, shares have tanked 28%. September is important in sports betting, because it's the start of football season. A year ago, DKNG suffered because more of the favourites were winning, so DKNG was paying out more. Meanwhile there is more betting (on anything) on the internet in prediction markets like Kalshi, offering strong competition to DKNG. He still believes in this, though you can wait until they report at the end of the month.

Interesting over a long horizon. Short term, it's more a question of how it grows amidst the broader market. What's the rate of legalization of online sports betting? Nice, sanitized way of saying gambling on your phone, which is becoming more popular, ubiquitous, and normalized in our culture. Many states still need to legalize.

For a lower-beta choice, look at FLTR.

He bought more at $42.50 on a pullback. Football season is starting.

Enjoys a secular tailwind from the younger demographic and online betters.

The space has really grown in NA, and this should continue. About 41x forward PE, but growth rate among it and peers is between 30-50% depending on the name. High beta, well over 1.5x the S&P, so it's volatile. 200-day MA inching sideways, slightly upwards more recently; stock price is above that. In general, technicals are neutral. Small position only.

A new law means that professional bettors will pay taxes on their winnings (but don't get a full tax deduction on losses). However, this could discourage bettors. However, since mid-June when the legislation was unveiled the shares of DKNG and FLUT have been rallying. Major sports books already discourage bettors who win too often. Also, the books cater to VIPs, those who bet a lot but don't win as much as the big winners. There's a chance this bill may not pass or could be amended. The two stocks hold a duopoly in sports betting, and more states are legalizing sports betting, so he remain bullish in them.

Enjoys the same tailwinds, and a duopoly, with Flutter whom they trail in market share. Has pulled back hard from highs.

Great fundamentals, though a quarter of the US still bans sports betting. DKNG has done a good job increasing parlay use. Delta just announced a partnership--we'll see how that plays out. iGaming saw a 14% bounce last quarter in customer count YOY; it's small, but has a lot of room to expand. Overall, DKNG has a lot going for it, and it does well during the NFL playoffs. Also, shares are down a lot, so shares are cheap.

He feels sports gambling is awful. We should see losses in these gambling companies because of the lack of duty of care. There will be fewer gambling companies ahead since it is a saturated industry.

Historically, stock does well in football season from now until the Super Bowl. Not a long-term, core holding. Get in, make some $$, get out. Technical setup looks really nice. Seasonally strong period for sports betting. Leader in the industry. No dividend.