DKNG announced this morning that it had become an Official Gaming Partner of WWE ($55, rated Equal-weight by Morgan Stanley analyst Ben Swinburne).

While betting on scripted events has significant limitations (results are set ahead of time so potential for cheating is high), the partnership is focused on free-to-play pools products that will further expand DKNG’s reach and help DKNG maintain its dominant position in sports betting / iGaming, in our opinion. DKNG is clearly taking the strategy of finding the most ways to drive eyeballs to its product, and with WWE having 38B digital video views and 1.4B hours consumed across its social and digital media platforms in 2020, both up 10% y/y, DKNG has clearly found another powerful outlet. DraftKings receives an exclusive license to media assets and in-game branding for WWE pay-per-view events. One concern we have is that WWE’s focus on a younger audience could drive increased scrutiny on problem gambling, following the NY Times article over the weekend.

For WWE, this partnership likely brings multiple benefits including incremental sponsorship revenues and increased fan engagement over time. Sponsorship is an opportunity broadly for WWE, as advertiser demand for live audiences and global brands create tailwinds to monetization. WWE’s Peacock relationship should help it leverage NBCU’s sponsorship and advertising scale.