DraftKings Inc

DraftKings, another relative detractor, is a leading online sports-betting and iGaming company. Shares fell after the company reported weaker initial 2026 guidance, partly reflecting higher operating costs and slower customer growth trends. These results fueled concerns that traditional sports betting may be losing ground to the growing popularity of the sports prediction markets. DraftKings is taking steps to bolster its competitive position through its expansion into the predictions market, where we believe it may benefit from its brand strength and economies of scale.

We initiated a position in DraftKings (DKNG) to gain exposure to the burgeoning online sports betting (OSB) and iGaming markets, where DraftKings and FanDuel have established a duopoly. We expect this dominant position to persist despite competition from prediction markets like Kalshi or Polymarket due to a superior product offering. Our thesis hinges on the persistent out-growth in lucrative wagers like complex parlays and live, in-game prop bets, which are pushing DraftKings' 'hold' (net revenue earned on gross dollars wagered) and its EBITDA higher and should continue to do so.

DraftKings, Inc. is a digital sports entertainment and gaming company operating in the U.S. The company parlayed its origins in daily fantasy sports into a top-two market position after online sports betting (OSB) was legalized in 2018. After transitioning from aggressive new bettor acquisition to more disciplined growth, DraftKings is now delivering significant free cash flow. The stock gained in the quarter after the company reported 20% revenue growth and more than 350% higher EBITDA. We see solid organic growth potential in existing states, as well as the possibility for legalization in new states.

During the quarter, we saw strong returns from both Boot Barn and DraftKings. This performance indicates a positive outlook for DraftKings as it continues to thrive in the competitive gaming sector. The company is well-positioned to capitalize on the growing market for online sports betting and gaming, which is expected to expand significantly in the coming years. Our decision to add to our position reflects our confidence in DraftKings' ability to deliver strong growth and returns.

DraftKings Inc. is a dominant player in the domestic online sports betting industry, which is evolving towards a favorable duopoly market structure. We believe the company is positioned to capitalize on the rapid growth of the U.S. sports betting market, expecting online betting to expand at a 15% to 17% same-state growth rate over the next several years. The company's financial model is inflecting positively as it has been operating in many states for over three years, allowing it to rationalize customer acquisition costs and achieve high incremental margins. We anticipate a 30%-plus CAGR in free cash flow over the next several years as margins expand and the company prioritizes returning capital to shareholders through buybacks.

DraftKings Inc. is a dominant player in the domestic online sports betting industry, which is evolving towards a favorable duopoly market structure. The company is positioned to capitalize on the rapid growth of the U.S. sports betting market, with expectations of online betting expanding at a 15% to 17% same-state growth rate over the next several years. DraftKings's financial model is inflecting positively due to its operational maturity, allowing for rationalized customer acquisition costs and high incremental margins. We expect a 30%-plus CAGR in free cash flow over the next several years as margins expand, supported by an excellent balance sheet and a focus on returning capital to shareholders through buybacks.

DraftKings Inc. is a dominant player in the domestic online sports betting industry, which is evolving towards a favorable duopoly market structure. We believe the company is positioned to capitalize on the rapid growth of the U.S. sports betting market, expecting online betting to expand at a 15% to 17% same-state growth rate over the next several years. The company's financial model is inflecting positively as it has been operating in many states for over three years, allowing it to rationalize customer acquisition costs and achieve high incremental margins. We anticipate a 30%-plus CAGR in free cash flow over the next several years as margins expand significantly.

We bought a new holding in DraftKings, an online sports betting and iGaming company in the US. DraftKings currently covers 25 states plus Washington DC, giving them access to around 49% of the population. They have significant opportunities for expansion as sports betting is rolled out to more states. Our hypothesis is that, similar to other geographies worldwide, betting in the US will evolve into a very profitable duopoly online, and we believe DraftKings will be one of those two players.

We bought a new holding in DraftKings, an online sports betting and iGaming company in the US. DraftKings currently covers 25 states plus Washington DC, giving them access to around 49% of the population. They have significant opportunities for expansion as sports betting is rolled out to more states. Our hypothesis is that, similar to other geographies worldwide, betting in the US will evolve into a very profitable duopoly online, and we believe DraftKings will be one of those two players.

We bought a new holding in DraftKings, an online sports betting and iGaming company in the US. DraftKings currently covers 25 states plus Washington DC, giving them access to around 49% of the population. They have significant growth opportunities as sports betting expands to more states. Our hypothesis is that, similar to other global markets, online betting in the US will evolve into a profitable duopoly, and we believe DraftKings will be one of those two players.