NFL Sundays Are Back!

With Labor Day Weekend well behind us, most of the country will be hanging onto every bit of summer that they can. In the North East this past weekend, the colder weather drifted in and it was likely the first Sunday where many of us forgot what a beach is, parked our butts on the couch and kicked up our feet for a Sunday full of sports. The PGA hosted a delayed US Open and the National Football League welcomed in a wild Week 2 with not a single positive COVID test from Week 1. Maybe life is returning to normal…

The start of the 2020 NFL season two weeks ago also means numerous hours are spent on research and preparation for various Fantasy Football leagues, Survivor Pick ‘Em pools and of course, sports betting. Normally, this would be the time in which there is a big uptick in sportsbook wagers being placed up and down the Las Vegas strip. However, given COVID quarantines, gamblers are turning to more modern methods to place their bets.

The unexpected pandemic, which led to lockdowns and a delay and even some cancellations of all major sports, led many bettors to Robinhood type trading platforms instead to “gamble” on their favorite stocks. With the return of “fan-less” sports, some of those wagers have shifted back to online betting. FanDuel and DraftKings are the two most popular platforms that have expanded from DFS, or Daily Fantasy Sports, into full-fledged online casinos. For those unfamiliar, these companies offer an online sportsbook platform, along with fantasy sports, allowing users to place sports bets from the comfort of their own couch, feet up and beverage of choice in hand. We have known for a while that Vegas would be one of the hardest hit economies given the complexities of this virus, and with many Americans spending more time at home nowadays, this has certainly created an ideal environment for the online sports betting business. Like many “hot” trends, these companies will be subject to normal pressures of growth, margin control and perhaps ultimately, gravity.

A question we are now posing as the return of sports has arrived; would this money be better off spent betting on sports, or being invested in online gambling company stocks? DraftKings stock (DKGN) has returned over 200%, since going public on April 24, 2020. That means that a $1,000 investment would result in a market value over $3,000 today, a solid return, or in the gambling world, a successful +200 underdog bet.

Would $1,000 worth of sports bets during this time period result in a similar return? The answer is unclear (though perhaps doubtful). Unlike betting, stocks are not a zero-sum game, and most companies make real money, hire real people and have potential for great long-term profits.

We are neither advocating nor disparaging gambling of any kind but believe disciplined, long-term investing certainly tilts the odds towards financial success and may prove a more rewarding use of any excess disposable income.

Important Disclosure: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Withum Wealth Management. [“WWM”] ), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this article/newsletter serves as the receipt of, or as a substitute for, personalized investment advice from WWM. Please remember to contact WWM in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. WWM is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the WWM current written disclosure statement discussing our advisory services and fees is available for review upon request.