NCAA wants a college prop betting ban: Would DraftKings take a hit?
NCAA President Charlie Baker has announced that the organization would like to see a ban on proposition betting, or prop betting, on college athletes. It's a practice he says "threaten[s] the integrity of competition." Investors on Wall Street now question the policy change's bottom-line impact on sports betting apps such as DraftKings (DKNG).
Yahoo Finance Anchors Brad Smith and Seana Smith discuss the sports betting sector and athletes' monetization.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: DraftKings still moving on news out Wednesday that NCAA President Charlie Baker is pushing to ban college proposition betting, a.k.a. prop betting, saying that the NCAA is trying to halt prop betting to protect student and professional athletes from threats and harassment. Investors wondering how much this is likely to impact the stock. A JP Morgan analyst saying this morning that investors could take advantage of the dip since DraftKings is unlikely to see any meaningful headwinds stemming from a potential ban.
You're taking a look at shares of DraftKings. They are up right now by about 1% here. The tournament continues to roll on this weekend and the championship into next week as well.
SEANA SMITH: Yeah. Nevada has reached out to DraftKings. They did not have a comment on this at this point, telling us to reach out to the American Gaming Association for further details. But when it comes to the bottom line impact of this, maybe it's not material as of yet, but you talk about the widespread adoption of online sports betting, how quickly it has become popular, as you talk about further legalized action. And given the fact that college sports are such a part of the culture already across the United States, so many people who are massive fans who do participate in online sports betting, obviously, watch collegiate athletes, watch these college games, especially March Madness, where there certainly is more and more activity, it seems like on a yearly basis.
So if we do see any sort of turn, any sort of change in the ability to make prop bets for college games, you would think that it would have an impact on the business. The degree though to that impact is clearly something that analysts are still trying to figure out at this point.
BRAD SMITH: Yeah. And it comes at a time where there's been a mind share change as to how college athletes are able to monetize themselves. And I think what this is doing is really pointing towards how that kind of-- that wind change has really meant, OK, the mentality is I might work with, you know, different entities and organizations who I think have my best interest in mind. I think what the NCAA and their argument is trying to do here is ensure that they're not getting approached by wrong entities and saying, OK, well, here's where we could-- you could make a quick buck or anything like that, trying to shield them from that and not alleging here from this seat, at least, that there's any unethical activity that's already taking place. But I think that's what they're trying to get ahead of right here.
SEANA SMITH: And certainly, we will be following this story as it develops.
