DraftKings estimates the Canadian sports betting market could be worth $5 billion

DraftKings Now Has The Money To Buy TheScore, So Where Did The Rumors Go?

With Monday’s announcement of DraftKings’ intention to raise new funding by taking on one billion in new debt, the big question is what the company plans on doing with it.

With all that money on hand, DraftKings is better positioned than ever to act on recent rumors that it intends to take over Score Media and Gaming. Yet those who, just a month ago, were treating the rumors like a sure thing have now gone quiet. So what gives?

TheScore would be a dual purpose acquisition

On Mar. 1, theScore’s closed its initial public offering on the NASDAQ (NASDAQ: SCR) stock exchange, raising $186 million. Around the same time, multiple outlets reported rumors that DraftKings might be interested in snapping up the Canadian company. Though there was no official indication of that intent, pundits pointed to several reasons it would make sense.

The rumors were based on DraftKings’ long-time interest in adding a pure-play media outlet to its asset list.  Toronto-based Score Media and Gaming makes a practical target in that regard, as it’s more affordable than some US alternatives.

Its location presents an additional advantage. DraftKings already has a solid foothold in the US. It operates in 12 states, giving it more reach than even its closest competitors. A Score Media takeover would offer DraftKings the edge in a hypothetical Canadian sports betting market. That’s a possibility which looks increasingly certain with each passing month.

It’s unsurprising, then, that Canada’s online gambling market is on DraftKings’ radar. At the company’s virtual Investors Day on March 9, the company offered a forecast that combined North American iGaming and sports betting markets could soon be worth upwards of $67 billion annually. DraftKings attributes $5 billion of that to the proposed Canadian market, which will soon include private sector online casinos in Ontario, as well as sports betting across Canada.

Most industry analysts would consider that $67 billion figure to be highly optimistic. However, DraftKings cited positive legalization trends and 2020 industry data as the basis for its projection. If that prediction comes true and their market share holds, it would mean gross annual revenue of between $5 billion and $7.3 billion for the Boston-based operator.

If not TheScore, then whom?

The rationale makes sense. Furthermore, DraftKings specified that it took on the extra $1 billion debt for “working capital and general corporate purposes,” including “M&A and products or technology investments.”

Somehow the news hasn’t sparked a renewed round of rumors regarding theScore. It may simply be media fatigue, or perhaps other theories now seem more promising.

Whatever DraftKings is planning, preliminary data from Michigan’s recent sports betting launch show the value of owning a media brand. DraftKings and direct competitor FanDuel have been shoveling money into advertising for years, and are reaping the benefits. Yet Penn National is already hot on their heels with its new Barstool Sportsbook, thanks to its associated media outlet Barstool Sports.

If not Score Media and Gaming, what else is the billion for? It’s hard to find another appropriate media target with a price tag that isn’t either much higher or much lower. Yet perhaps the money isn’t all earmarked for a single purchase. There are any number of smaller companies DraftKings could consider snapping up à la carte.

One example of a smaller possible media target would be the startup Meadowlark Media. Another hypothesis that’s been floated is the Run It Once poker coaching brand, and its associated poker platform. There’s been ample speculation that DraftKings will be branching out into online poker, a goal it could accomplish either through an acquisition like Run It Once, or by spending money developing its own product.

Whatever its intent, DraftKings is no stranger to spending bales of money to cement its share of the market. With the capital now on hand, it should only be a matter of weeks or months before we hear something more official.

- Robyn McNeil is a Nova Scotia-based writer, bartender, and editor. She lives in Halifax, Nova Scotia, with an awesome teen, a mischievous cat, and a penchant for good stories, strong tea, cheeseburgers, yoga, graveyards, hammocks, gardening, games, herb, and hoppy beer.
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