DraftKings Stock Takes Roller Coaster After Surcharge Plan
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00:00Let's touch on DraftKings here and let's kind of review the last couple of weeks here.
00:07They just had their stock update here.
00:09And, you know, initially for people who are unfamiliar, DraftKings made an announcement
00:14that they were going to add a surcharge to sports betting winnings.
00:16They walked that back.
00:18And I'm sure investors, especially large investors or DraftKings are watching these
00:22numbers just go up and down and up and down, sort of a rollercoaster ride for them, I
00:26would imagine.
00:27Craig, it was it was really interesting the way that DraftKings did this.
00:33DraftKings announced their earnings and they announced it the night before they had the
00:36call. And hidden in the investor letter that they had was an explanation as to why they
00:43were implementing the surcharge in states that had higher than a 20 percent tax rate.
00:49And it kind of went crazy on social media because people were just saying, why would
00:56anyone bet with DraftKings in those states then?
00:59All things being equal, why would you go to an operator who is going to take more money
01:05from your winnings than someone else?
01:08It's even more clear cut than just price shopping and line shopping at that point.
01:13Right. You see it on your bet slip that this is what's going to be deducted from your
01:18winnings. So the stock didn't do too well after that.
01:22And you know what? The stock market was shaky on those days.
01:29DraftKings also announced that they were, you know, they expect higher losses than
01:33expected in some areas.
01:35So it was muddled.
01:36But obviously this had a lot to do with it because naturally everybody said, OK, what's
01:40FanDuel going to do? Well, FanDuel did not match it.
01:45And shortly after that, it was only 12 days after DraftKings said they were doing it and
01:5111 days after DraftKings CEO Jason Robbins said it would take quite a lot for
01:56DraftKings to decide not to do this.
01:59DraftKings announced shortly after FanDuel said no, that they would be scrapping the
02:03idea as well.
02:06Can't really give you a good reason as to why they did it this way, Craig, and why they
02:11tried. But you know what?
02:12As far as the investors are concerned, they're just happy that it's over.
02:17The stock dipped below 29 bucks for a little bit.
02:21It was it was a big dip.
02:24It was down 15 percent on Monday morning after the Friday conference call.
02:30But they've made all that back and more since just last week when FanDuel said no and
02:36then DraftKings said no, too.
02:39Look, I thought DraftKings would be dragged for longer than this than they have been.
02:44I didn't actually see the surcharge ever coming into effect because, again, they were
02:50getting left out on an island left and right by operators saying, no, we're not going to
02:54do this. But.
02:58Really, DraftKings is doing OK now, they have not taken a black eye from this and
03:07kind of just putting it in the rearview mirror, you know, so investors are happy.
03:11The stock over those 12 days, more than half those days, it traded at higher than the
03:15average volume.
03:16So it was it was really on the minds of a lot of people throughout that whole time.
03:20But now we know that DraftKings, after no one else joined them, will not be adding this
03:26surcharge. And I think it's I think it's pretty clear that everybody is happier this
03:32way.