(Bloomberg) — Michael Jordan’s love of gambling once threatened to overshadow his legacy. Now the billionaire is embracing the growing online gaming industry as part of his personal investment portfolio.
Jordan is the latest owner of a major U.S. sports franchise to invest in the gambling space, joining New England Patriots owner Robert Kraft and Dallas Cowboys owner Jerry Jones. The NBA legend is taking an equity interest in DraftKings Inc. and becoming a special adviser to the online sports-betting company’s board of directors, a move that sent the company’s high-flying shares even higher.
The six-time NBA champion, whose love of gambling is well-documented, will provide guidance and advice on strategy, product development and marketing activities, the company said Wednesday.
DraftKings rose as much as 12% and was up 3.9% to $38.35 at 11:55 a.m. in New York, adding about $500 million to the company’s market value.
“Michael Jordan is among the most important figures in sports and culture, who forever redefined the modern athlete and entrepreneur,” DraftKings co-founder and Chief Executive Officer Jason Robins said in a statement.
Details of the equity stake weren’t disclosed. Jordan is also the chairman and majority owner of the NBA’s Charlotte Hornets. The team is worth $1.4 billion, according to a Bloomberg analysis.
DraftKings started trading publicly in April after a reverse merger with Diamond Eagle Acquisition Corp. The shares have more than doubled. Its investors have included the owners of the Patriots and Cowboys.
Jordan’s affinity for betting is well known. An episode of ESPN’s “The Last Dance” detailed the basketball great’s controversial history of gambling in casinos, on team flights and on the golf course. During the 1990s, Jordan’s propensity for gambling often overshadowed his play on the court.
The documentary, which also aired on Netflix Inc., was a huge draw this year for people stuck at home during the pandemic and reminded the world again of Jordan’s star power.
DraftKings is just Jordan’s latest gig as a company pitchman. Nike Inc.’s Jordan Brand brought in over $3.6 billion in wholesale equivalent revenue for the 12 months ended May 31.
DraftKings has been battling competitors, like Flutter Entertainment Plc’s FanDuel, for market share in states where sports gambling is legal. The two companies account for roughly two-thirds of online sports bets in the U.S., according to Bloomberg Intelligence.
Share Run-Up
FanDuel has made similar moves with sports personalities, announcing an official partnership with punter-sports analyst Pat McAfee in July.
The huge run-up in sports betting shares has some analysts worried the nascent industry may be experiencing a bubble.
Barry Jonas, an analyst with Truist Financial, initiated coverage of DraftKings on Wednesday with a hold recommendation. Investors are chasing a business that could generate $1.2 billion in annual profit. But that “could be nearly a decade in the making with years of losses before then,” he said.
“While DraftKings could still be a long-term leader, its stock price leaves little room for error,” Jonas said.
The NBA has loosened its policies regarding sports-betting businesses and team investors. Houston Rockets owner Tilman Fertitta said his sports-betting business, Golden Nugget, was initially forbidden from taking bets on the NBA. That ban has been narrowed to just Rockets games.
In response to a question about Jordan’s DraftKings investment, a league spokesman said: “NBA team investors, including governors, are permitted to have involvement with sports betting and fantasy sports businesses, subject to safeguards required under league rules to prevent actual or perceived conflicts of interest.”
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