Illinois's Tax Hike Impact on FanDuel & DraftKings Stocks
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00:00I know that there's a CFO transition going on at FanDuel as well.
00:08And on top of it, how did the news last week that came in that Illinois was raising the
00:12tax rate on sportsbooks to 40%, how did that affect the stock market and their prices?
00:18Yeah, obviously they dipped.
00:21It's not good news when you see that your tax rate is going to go up that much.
00:26And the shares started to dip on DraftKings and FanDuel even before it was certain that
00:31it was happening.
00:32You know, the Senate basically made the move and they said, the market said, okay, that's
00:36it.
00:37It's happening.
00:38And they started to take the hit from there.
00:41But we've gotten a couple of analyst notes since then that are suggesting that the hit
00:46will not be as big as maybe it seems right now, and there are different ways to mitigate
00:53that.
00:55These guys are good at cutting costs where they need to and trying to make money.
01:00And I think without leaving Illinois, they're going to be able to figure it out.
01:04One note specifically from Barry Jonas of Truist, he does a look each month at what's
01:11going on in iGaming in the U.S. and he came out with a ranking system on sports betting
01:16operators and Tier 1 was DraftKings and FanDuel naturally.
01:21And then he skipped Tier 2 and went to Tier 3, which is a BetMGM, Caesars and ESPN bet.
01:28And he said, note that we skipped Tier 2.
01:30We don't think any operator in the space qualifies for that standing with how much white space
01:35there is between DraftKings and FanDuel and the rest of the field.
01:40Yeah, it is interesting because at some point that should change, right?
01:47And Barry got into that because when you look at BetMGM, when you look at Caesars,
01:51when you look at ESPN bet, they have those retail database, player databases.
01:57And so at some point when all of the technology should finally be on a level playing field,
02:05that's when Barry said, you know, we could start to see some of that share shift.
02:10And maybe there would be more of a legitimate Tier 2.
02:13Maybe there could be somebody coming in to challenge that Tier 1.
02:19I thought it was interesting to add ESPN bet into that third tier, piggybacking off of
02:25what we just spoke about.
02:27But there is still so much potential for ESPN bet, Craig.
02:31ESPN has been bragging about just how they've been crushing it in digital recently.
02:37They had 24.7 million visitors on the ESPN app last, in April.
02:44They are adding all of these people and places and their social platform saw like 184.9 million
02:54users.
02:55And they only, they have under 700,000 active bettors right now on ESPN bet.
03:01So there is still a lot of potential to grow for ESPN bet, as long as they nail that integration.
03:08I can't even guess how many times I've said that now, they have to nail that integration.
03:14As far as FanDuel with the CFO transfer, the timing was a little interesting because they
03:18listed in New York back in January.
03:23And then on May 31st, they made that their primary listing instead of the London listing.
03:27And in that release, they also said, oh, by the way, our CFO, he can't come to America.
03:32He has family back there.
03:34So effective immediately, there's a new CFO.
03:39And that was, the timing was strange.
03:42I think personally, that could have been presented in a different way.
03:46But overall, that shouldn't be too crazy.
03:49The gentleman is coming from within Flutter already.
03:53So he's familiar with the landscape.
03:56Shouldn't be that big of a hit.
03:59But yeah, we are still watching to see what exactly these stocks are going to do when
04:04the higher tax rates get hit.