Is Betting on DraftKings Stock a Good Idea?

November 4. 2022. 6 mins read

Readers know that one of our oft-repeated refrains is that if 95% of professional investment managers can’t beat a broad market benchmark, it’s extremely doubtful we can do better. That’s why we diversify and only hold a double-digit percentage of our total assets in tech stocks, some of that being allocated to fintech. On the other hand, who doesn’t like to gamble once in a while, right? The worldwide market for casino and online gambling was $231 billion last year, according to Statista, so obviously there are plenty of volunteers willing to part with their money.

We’ve read that even the best professional sports gamblers only sport a winning percentage of about 53% or so – not much above break even. But just like there are lots of people who think they can predict the stock market, there are loads more who think they can beat the odds, when we know the real winners are the companies that run the games. That’s probably why one of the biggest tech gamblers investors, Cathie Wood of Ark Invest, is sweet on DraftKings (DKNG), an online gambling company that raked in $1.3 billion in revenue last year – more than doubling revenue from 2020. Ark Invest owns about 5% of DraftKings, making it the 16th biggest holding across all of the investment management firm’s tech-centric ETFs.

U.S. gambling industry revenues.

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