Jim Cramer’s Latest Game Plan: 15 Stocks to Watch

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8. DraftKings Inc. (NASDAQ:DKNG)

Number of Hedge Fund Holders: 56

DraftKings Inc. (NASDAQ:DKNG) is set to report its third-quarter results on November 7. Cramer called it a “terrific story”.

“DraftKings also reports after the bell. And you know, you might be shocked to find out that there’s gambling going on here. I think it’s a terrific story and a very good investment.”

DraftKings (NASDAQ:DKNG) is a leading digital sports entertainment and gaming company, providing a range of online products and services. The company offers online sports betting, casino games, daily fantasy sports, and retail sportsbooks. In addition to its consumer-facing offerings, it develops and supplies sports betting and casino gaming software for online and retail sportsbooks, as well as iGaming operators.

The U.S. sports betting market has seen rapid growth in recent years, with Goldman Sachs Research projecting that Americans could spend $45 billion annually on sports betting once the market matures. Since 2018, sports betting in the U.S. has evolved into a $10 billion industry. As of Q2, the company reported 3.1 million monthly unique players, indicating substantial potential for further user growth.

DraftKings (NASDAQ:DKNG) has been actively expanding its presence in other sectors of the gaming industry, largely through acquisitions. In 2022, the company acquired Golden Nugget Online Gaming to strengthen its position in the iGaming market, a move that has already proven beneficial. During the last earnings call, management highlighted that in a recent third-party survey, the DraftKings and Golden Nugget apps were ranked No. 1 and No. 2 in iGaming.

Additionally, the company made another acquisition in 2024, purchasing the digital lottery platform Jackpocket. This move is aimed at capitalizing on the expanding lottery market, with management expecting Jackpocket’s integration to positively contribute to EBITDA by 2025.

As DraftKings (NASDAQ:DKNG) continues to grow and expand into new markets, the company is also addressing the challenges posed by high-tax states. For states with multiple sports betting operators and tax rates exceeding 20%, including Illinois, the company intends to introduce a gaming tax surcharge starting January 1, 2025.

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