DraftKings Inc. (NASDAQ: DKNG) has been one of the more innovative companies in 2020, taking gambling to an online platform. Despite the ravages of COVID-19, the online casino has proven to be fairly lucrative, as most of the regular casinos have been locked down. This most recent move by the company is less of a gamble and more of a calculated risk.
The online digital sports and gaming firm announced Tuesday that it would be partnering with InComm Payments, a global payments technology company, to launch a first-of-its-kind retail gift card.
By leveraging InComm Payments’ retail network, DraftKings is expanding its reach with physical distribution and brand presence to the most frequently visited retail chains across the country. The launch will expand DraftKings’ presence in convenience stores like 7-Eleven, Speedway, Dollar General and Sheetz, and also it will enable consumers to gift these DraftKings cards to others in $25 and $50 denominations.
One thing to consider here is what this move actually exposes DraftKings to. In the past, DraftKings would only be able to take online or digital payments from customers, or even just payments from credit cards. This move further exposes DraftKings to cold hard cash, where anyone without a credit card or bank account can still buy into the “DraftKings experience.”
There are some implications on what this move could mean for some demographics of DraftKings customer base, but ultimately getting into gift cards expands the base.
Management took the marketing perspective and said that this agreement not only offers consumers a great gifting opportunity but also represents a significant brand expansion and enhancement opportunity for DraftKings, which, for the first time, will benefit from having its brand present in tens of thousands of InComm Payments’ retail partner locations across the United States.
DraftKings stock traded up more than 3% Wednesday morning, at $52.20 in a 52-week range of $10.09 to $64.19. The consensus price target is $59.74.