Team Owners and Major Investors in DraftKings
A group of Major League team owners, including James Dolan, Robert Kraft, Hal Steinbrenner, and Jerry Jones, made significant investments in the sports betting company, DraftKings, before its public offering on April 24. According to a filing with the Securities and Exchange Commission, these owners held shares either directly or through affiliated companies. This information was made public on Tuesday, and it has attracted attention from market watchers.
DraftKings saw a 7.5% increase in its stock price as it was revealed that early investors also included ESPN owners Disney, the NHL, and billionaire George Soros. This surge in stock price is a reflection of the company’s tie-up with SB Tech, a technology platform for gambling and sports betting. Since its debut in the market, DraftKings stock has more than doubled, unleashing substantial profits for its investors.
The Complex Relationship between Sports Leagues and Gambling
Pro sports leagues have historically had a love-hate relationship with gambling. However, the landscape has become more intricate, particularly as team owners find themselves in a position to profit from the growing handle bet on their games. William Shakespeare once wrote, “Misery acquaints a man with strange bedfellows,” and the prospect of profit often leads to unexpected alliances. In the investment world, acquiring shares of a company during its initial public offering can lead to significant financial gains. Yet, there is even more money to be made by obtaining shares at a lower price while the company remains private.
DraftKings attracted major league team owners and hedge fund managers as early shareholders. Notably, The Walt Disney Company, through its affiliate TFCF Sports Enterprises, held a substantial private stake in DraftKings due to its acquisition of the assets of 21st Century Fox. Famed hedge fund manager George Soros also had a private stake through his Quantum Fund. Additionally, the NHL, WWE, and Legends Hospitality, a joint venture between the New York Yankees and Dallas Cowboys, were among the early investors in DraftKings.
Ownership and Investments
Several team owners made notable investments in DraftKings:
- James Dolan, owner of the Knicks, owned over 1.4 million shares.
- Robert Kraft, owner of the Patriots, and his family held approximately 3.5 million shares.
- Legends Hospitality, a joint venture between the Yankees and Cowboys, secured nearly 200,000 shares.
In addition to these team owners, the MVP All-Star Fund, which specializes in private investments for celebrities and professional athletes, held around 2.7 million shares of DraftKings. It is conceivable that other major league players also acquired shares early on.
Team Owners Profiting from Gambling
While all professional sports leagues strictly prohibit players from participating in sports betting, team owners and leagues themselves have not shied away from investing in the expanding legalized sports betting industry. The relationship between DraftKings and various leagues began with their involvement in daily fantasy sports. However, after the US Supreme Court overturned the ban on sports betting, the potential for lucrative returns from legal sportsbooks became apparent.
DraftKings, already a leader in the daily fantasy sports market, was well-positioned to capitalize on the legalization of sports betting. Some team owners recognized the investment opportunity early on and took advantage of it. This demonstrates the interesting juxtaposition of team owners profiting from gambling while simultaneously prohibiting players from engaging in it.
Conclusion
The involvement of major league team owners and other high-profile investors in DraftKings showcases the convergence of sports and gambling in today’s society. While pro sports leagues historically had a complex relationship with gambling, the potential for financial gain has led team owners to invest in sports betting companies like DraftKings. This trend is further fueled by the legalization of sports betting, which has opened up new opportunities for profit. The story of DraftKings and its early investors highlights the intricate dynamics between pro sports, gambling, and investment.
Frequently Asked Questions
1. Can players in professional sports leagues participate in sports betting?
No, professional sports leagues prohibit players from engaging in sports betting due to the potential for match-fixing and other integrity concerns. Players who violate these rules face suspension or other penalties.
2. How have sports leagues like the NHL and WWE invested in DraftKings?
Both the NHL and WWE acquired shares in DraftKings prior to its public offering. This investment allows these leagues to potentially benefit from the growth of the sports betting industry.
3. Why do team owners invest in sports betting companies?
While players are prohibited from participating in sports betting, team owners are not bound by the same restrictions. Investing in sports betting companies presents an opportunity for team owners to generate significant financial returns.
4. How has the legalization of sports betting impacted the industry?
The legalization of sports betting has created new avenues for revenue and investment. Companies like DraftKings, which were already involved in daily fantasy sports, have seized the opportunity to expand their operations and capitalize on the growing popularity of sports betting.
5. What challenges do sports leagues face in their relationship with gambling?
The relationship between sports leagues and gambling remains intricate. While there are financial benefits to be gained from the legalization of sports betting, leagues also need to maintain the integrity of their sports and prevent potential conflicts of interest. Striking the right balance between profit and maintaining the trust of fans can be a challenge.
