The respective share prices of online gambling company 888 (888) and US fantasy sports betting firm DraftKings (DKNG:NASDAQ) look like a mirror image of one another with 888 shares down 45% and DraftKings up 172% over the last year.

888 shares fell 25% on 14 July after revealing strategic talks with FS Gambling – a consortium comprised of former executives at GVC, the business now called Entain (ENT) – have been terminated over concerns 888 might lose its UK gambling licence if proposed management changes went ahead.

Ex-GVC boss Kenny Alexander, former chairman Lee Feldman and Stephen Morana were looking to install themselves as CEO, chairman and chief financial officer respectively. FS Gambling purchased a 6.5% stake in 888 on 6 June.

HMRC is investigating GVC’s former Turkish operations which were sold in 2017, at which time Alexander was CEO of the group.

Entain said in May 2023 it had entered into deferred prosecution agreements with the Crown Prosecution Service in relation to the HMRC investigation, acknowledging that historical misconduct involving former executives may have taken place.

The board of 888 has concluded that appointing the former GVC executives could result in a licence revocation and therefore terminated discussions. Meanwhile, interim CEO Jonathan Mendelsohn said the board expects to announce a new chief executive in the very near future.

Shares in DraftKings have been on a tear as investors and analysts anticipate an acceleration in sales momentum which could drive an inflection point in margins and profitability.

In May the company raised guidance for 2023 revenue by around 8% to between $3.14 billion to $3.24 billion after beating first quarter revenue expectations.

DraftKings said the number of monthly unique players increased 39% to 2.8 million compared with the prior year with average revenue per MUP up 35% to $92.

Stronger than expected revenue growth helped the company beat profit expectations with a quarter loss per share coming in at $0.51, almost half the $0.89 loss per share forecast by analysts.

Over the last few quarters consensus revisions have steadily increased, taking 2023 full year net loss expectations to $874 million from over $1 billion with the net loss anticipated to halve again in 2024. Improved analyst revisions often drive relative share price performance.

On 17 July analysts at Jefferies increased 2024 revenue and profit estimates by 7% and 4% respectively. They said: ‘As we approach the forthcoming second quarter results for DraftKings, we expect the near-term performance and longer-term prospects to have improved incrementally.’

DraftKings and Flutter (FLTR)-owned FanDuel dominate the US fantasy sports betting market with a combined market share of around 74% according to market research company Eilers & Krejcik Gaming.

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