New York Legalize Gambling

• When Did New York Legalize Gambling
• New York Legalize Gambling Legislation
• Will New York Legalize Sports Gambling
• New York Legalize Gambling Marijuana

(DKNG), which was up over 5% today due to news that the state of New York may. Dec 09, 2020 New York doesn’t have regulated online gambling, but New Yorkers can join offshore gaming sites without legal repercussions. Joseph Addabbo introduced an online poker bill in 2019, but the bill failed to pass through the legislature.

New York state may legalize online sports betting, which would be boon to DraftKings (DKNG), but the The stock is currently trading at a high valuation. Should you invest ?

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This story originally appeared on StockNews

DraftKings Inc. (DKNG – Get Rating), which was up over 5% today due to news that the state of New York may legalize online sports betting, finished the day with a 3.8% loss, at $48.94, as took profits off the table. The stock is up a whopping 357% year-to-date.

DKNG is a digital sports entertainment and gaming company. The company provides users with fantasy sports, sports betting, and iGaming opportunities and is also involved in the design and development of sports betting and casino gaming platform software for online and retail sportsbook and casino gaming products. While the company has a lot of potential, its Price to Sales ratio of 41.3 is considerably high, especially compared to the S&P 500’s 2.7.

The question many investors have is it worth buying at its current price. Wall Street analysts have different views on the stock. Needham analyst Brad Erickson has a $70 price target, while J.P. Morgan initiated coverage with a “Neutral” rating and a $48 price target. J.P. Morgan’s position is that the company may not have room for more expansion due to increasing competition, slowly moving legalization and high price.

On the other side, Erickson believes there is plenty of room for upside, as Needham projects sports betting could grow into a $58 billion industry stateside. There are also mixed views from other analysts. According to the StockNews price target feature, 16 analysts rate the stock a “Strong Buy,” and 9 have it as a “Hold.” The average price target from 22 of the analysts is $60.27, with a low of $39 and a high of $100.

DKNG’s stock has been trending up recently after voters in three states, including Louisiana, Maryland, and South Dakota voted to legalize wagers on sporting events. This makes 24 total states that allow this type of betting. The company also finalized a deal with Foxwood Resorts Casino in Connecticut, even before sports betting is legalized in the state.

In mid-November, DKNG reported strong third-quarter results. Its revenue shot up 98% year over year, driven by its merger with Diamond Eagle. The return of major sports, including the NBA, MLB, NHL, and the start of the NFL season, also contributed to its top line due to strong customer engagement. Even before sports resumed, the company held strong as people betted on other events such as esports.

The company also reached a milestone in the quarter as it surpassed one million monthly users. DKNG revised its full-year guidance from a range of $500 million to $520 million to a range of $540 million to $560 million. It also now expects revenue of $750 million to $850 million for 2021.

Once the virus is behind us and we go back to a full calendar year of sports, DKNG’s revenue should see even higher gains. Fantasy sports has grown immensely over the past couple of decades, and DKNG is a pioneer in the industry.

In more good news for the company, Canada’s Department of Justice decriminalized single-event sports betting. This would allow provinces in Canada to issue licenses to companies that accept bets on sporting events, with the exception of horse racing. This provides the potential for billions of dollars in revenue should DKNG expand into Canada.

In terms of its balance sheet, the company had $1.1 billion in cash at the end of the quarter and no long-term debt. This will allow the company to increase its marketing budget and expand its operations.

The stock is rated “Neutral” in our POWR Ratings system. While I believe the company has more room to grow over the next few years, its current price is a tad high for my liking.

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DKNG shares fell $0.05 (-0.10%) in after-hours trading Wednesday. Year-to-date, DKNG has gained 357.38%, versus a 15.61% rise in the benchmark S&P 500 index during the same period.

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New York may get an unexpected Christmas gift this year — online sports betting.

Assemblyman Gary Pretlow told PlayNYthat he had a call Tuesday that solidified a commitment from AssemblySpeaker Carl Heastie to include mobile sports betting in a revenue bill.

The question is if New York will move on a revenue bill in the limited time remaining this calendar year. With a federal coronavirus stimulus billcoming together, odds are improving that they will.

“I think Congress will pass the stimulus bill within a week, which is setting it up for New York to do something with the revenue bill this year,” Pretlow said.

“All I know is we will do a revenue bill at some point in time and it will include mobile sports betting.”

Commitment is an act, not a word

Pretlow told PlayNY in August that he had a commitment from Heastie to include online sports betting in a revenue bill.

That marked significant progress for the effort. In April, Heastie blocked the inclusion of sports betting in the Assembly budget proposal.

Last year, an online sports betting bill passed through the Senate, but Heastie didn’t put it up for a vote in the Assembly. If he had, Pretlow believed it had the votes to pass.

Heastie and Gov. Andrew Cuomo previously stated concerns over whether a 2013 constitutional amendment that legalized New York casinos and permitted them to have sports betting extended to online.

Pretlow planned to introduce a constitutional amendment bill to start that long process before the commitment from Heastie dissuaded him.

When Did New York Legalize Gambling

How NY online sports betting could happen in 2020

Pretlow asserted that a revenue bill could come together quickly in New York. He confirmed there have been top-level discussions in each chamber on what to include.

Here are the steps forward for New York to do a revenue bill this year:

• Congress passes, and the President signs, a coronavirus stimulus package that doesn’t take care of all New York’s revenue needs.
• Cuomo proposes a revenue bill to address the shortfall.
• Both legislative chambers propose additional revenue, including from online sports betting, to fund more spending.
• Cuomo recognizes the will of the legislature, which now has a veto-proof supermajority, and doesn’t fight the inclusion.

“It can all come together very quickly,” Pretlow said. “I’m pretty sure the governor and Department of Budget already have a bill put together with what they need. Then we just have to fill in the blanks. It can happen within a week.”

Why New York could rush revenue bill before year’s end

New York Legalize Gambling Legislation

New York doesn’t need to address the revenue shortfall until March 31, the end of the fiscal year.

However, Pretlow noted that there is possible urgency to complete the revenue bill before the end of the calendar year.

If the revenue bill includes any tax increase, that increase can go into effect Jan. 1 if passed this month. If the state waits until the new year to complete a revenue bill, the tax wouldn’t take effect until 2022. That would defeat the purpose of needing the revenue to address the shortfall now.

“We don’t know what we need yet and we don’t want to raise taxes unnecessarily,” Pretlow said.

What will NY online sports betting look like?

Pretlow said he is looking to use the same mobile sports betting language passed by the Senate last year. The only change he wants is to increase skins from one to two, creating an additional $84 million in licensing fees.

Details of the bill as passed by the Senate include:

Will New York Legalize Sports Gambling

• Authorize online sports betting through New York casinos
• Set a $12 million initial licensing fee
• Add a 12% tax on online sports betting
• Provide a 0.2% royalty fee on all wagers to the professional sports leagues on which the bets were placed
• Starting 20 months after the effective date of the law, stadiums, and arenas with a capacity of more than 15,000 seats may partner with New York casinos to have sports betting kiosks connected back to the casino via the internet

Pretlow indicated that there has been no serious consideration given to expediting casino licenses for downstate New York in the revenue bill.

New York Legalize Gambling Marijuana

“As of right now, it doesn’t look good,” Pretlow said about issuing full casino licenses in the New York City area. “If it turns out we need an extra billion dollars, it has legs. All of this is fluid.”