Danny Moses Explains Bearish Stance on DraftKings Amidst New Competition

DraftKings Valuation and Current Risks

• 💡 Despite a recent 3% increase and a 15%+ rise this year, Danny Moses is becoming less bullish on DraftKings.
• 🎯 DraftKings is currently trading at a high valuation of 22-23 times EBIDA, indicating it's no longer cheap.
• ⚠️ Several states have increased online gambling taxes, adding financial pressure.

Emerging Competition and Market Threats

• 🦠 The emergence of Koshi is a significant concern, not necessarily due to its current size, but because regulators like the CFTC are not actively addressing it.
• ⚡ Koshi is acquiring customers in California and Texas, which could be costly for DraftKings and FanDuel to win back later.
• 📈 The most profitable segment for DraftKings, in-game live wagering, is directly exposed to competition from Koshi.

Broader Gaming Sector and Alternative Investments

• 🌏 Moses still likes the macro outlook for the gaming sector and has some long positions, but significantly fewer than before.
• 🇨🇳 He believes Macau, specifically Melco, is poised for a rebound as the last COVID-related trade to recover.
• 💰 Competitors like Poly Market, backed by Peter Thiel's Founders Fund, are raising money at a billion-dollar valuation, signaling new VC interest in the space.

Sustainability of Business Models

• 📉 The strategy of altering odds to make betting less customer-friendly to offset taxes is questioned as a sustainable model.
• 📊 While the stock has been resilient and showing signs of breaking a four-year downtrend, the increasing competition and valuation concerns are highlighted.