Fund manager Cathie Wood is widely followed for the moves she makes in the Ark Funds. An addition from Monday is up big on the news and could be the first added in a high growth industry.
What Happened: On Monday, shares of DraftKings Inc (NASDAQ: DKNG) were added to the Ark Next Generation ETF (NYSE: ARKW).
The fund added 620,300 shares, representing 0.5% of the assets in the fund. Ark has a tendency to make small initial investments and then add on several occasions. This was a rather large first addition for the sports betting name.
Related Link: Cathie Wood Could Be Launching A Space Exploration ETF
Why It’s Important: Ark Funds analyst Nicholas Grous shared thoughts on the overall sports betting market growth that could have predicted the company adding exposure to the sector.
“Augmenting fantasy sports and e-sports, legalized online sports betting is giving companies – and the leagues themselves – an opportunity to offer exciting interactive experiences and generate new sources of revenue,” Grous said, according to casino.org.
While most analysts see the sports betting market hitting $15-$20 billion over the next several years, Ark is rather bullish on the growth.
“We believe revenues in the three sports betting categories combined could grow 31 percent at a compound annual rate from $9.5 billion last year to $37 billion in 2025,” Grous said, adding that online sports betting could be worth $180 billion someday.
DraftKings is present in more states than any other competitor with the recent additions of Michigan and Virginia pushing the total to 12 states.
Benzinga’s Take: Given the massive market size projected by Ark Funds, the company could take a larger position in market leader DraftKings. Ark Funds could also add additional companies with exposure to the sports betting market.
Skillz Inc (NYSE: SKLZ) was added to the Ark Funds ETFs to give exposure to sports betting and esports.
Shares of DraftKings are up 9% to $59.60 on Tuesday.
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