Shares of DraftKings surged Monday with March Madness in full swing. DraftKings, the IBD Stock of The Day for Monday, is trading near a buy point as the NCAA Men's College Basketball Tournament is scheduled to tip off Tuesday evening, followed by the start of the NCAA Women's Basketball Tournament on Wednesday.
Betting Billions
The brackets were officially set on Sunday night. And millions of Americans are placing their picks for who will come out on top for the NCAA tournaments. The American Gaming Association estimates that U.S. adults will legally wager $2.72 billion on the 2024 men's and women's March Madness tournaments, which is equivalent to 2.2% of the total handle legally bet by Americans in 2023.
Handles refer to the total amount that sportsbooks and casinos accept from bettors.
The AGA in late February reported that U.S. commercial gaming revenue rose 10% in 2023 to a record $66.52 billion, driven by a 44.5% increase in sportsbook revenue to $10.92 billion. Fourth-quarter gaming revenue increased 9.5% to $17.42 billion. Sportsbook revenue in Q4 leapt 30.8% to $3.41 billion.
Meanwhile, sports betting is legal in more states than ever following the March 11 launch in North Carolina. AGA data shows sports betting is now live and legal in 38 states and Washington, D.C.
DraftKings now operates in 27 states as well as Ontario, Canada, following the March 11 N.C. launch.
New Rivalries In N.C.
While the University of North Carolina, Duke and North Carolina State University battle it out for college basketball dominance, another competition is underway for top bookie. The N.C. launch marked a flood of sportsbook entrants, including DraftKings rivals BetMGM, Flutter Entertainment-owned FanDuel, Caesars, Bet365, Fanatics, Underdog Sports and Penn Entertainment, which purchased the rights to the ESPN Bet brand for its sportsbook.
The companies over the past weeks pummeled North Carolinians with advertisements promoting bonus bets for sign-ups and referrals, increased odds, and North Carolina-themed wagers in an attempt to capture the new market.
Vancouver-based GeoComply, which tracks location data for online sportsbooks, reported over 370,000 new active accounts in North Carolina within 48 hours after launch. The company said it conducted more than 5.36 million geolocation checks in the state between noon March 11 and noon March 13.
"With March Madness on the horizon, North Carolina is poised to be one of the leading markets in the country," GeoComply wrote in its social media post.
Meanwhile, DraftKings is coming off its Q4 earnings beat from Feb. 16 that showed adjusted earnings improved to 29 cents per share from a loss of 14 cents the year prior. However, the revenue growth rate slowed for the second quarter in a row, at 43% to a record $1.23 billion.
UBS lifted its price target on DKNG stock on March 4, noting continued improvement in DraftKings' ability to retain customers and its unit economics across existing businesses. UBS raised its price target on DKNG to 56 from 44 and kept a buy rating on the shares.
DraftKings Stock
DKNG stock joined IBD's SwingTrader — which focuses on taking advantage of short-term stock trends — on Monday. DraftKings is also a member of the elite IBD 50 list, and it's on the Leaderboard Leaders Watchlist.
DKNG stock has been tightening along support at its 21-day exponential moving average since late February. The stock is actionable now as a pullback for aggressive investors. Investors could wait for DKNG to hit a 43.68 buy point, which has offered resistance twice in the past six days.
Shares surged 4.2% Monday on DraftKings' highest volume in five days. DraftKings rallied more than 23% so far this year following a double-bottom breakout in late January.
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