It Was Beach Season
In mid-June, Draftkings CEO Jason Robins may have surprised some viewers with his frank commentary about the sports gambling industry during an interview on CNBC. Draftking’s biggest competitor over the coming months isn’t Fanduel or Penn National, it’s “going to the beach this summer.”
That may seem like a pithy comment, but it’s not one to be taken lightly because it was a real risk. And while beach season may now be over, bringing speculators back to gambling venues for the fall and football season, the sentiment underscores a risk for financial markets too.
When the coronavirus pandemic brought the sports industry to its knees in spring 2020 – an industry in America that making $1.5 billion in revenue annually pre-pandemic – it created a wave of liquidity and speculative appetite that needed an outlet. Coupled with the fiscal relief efforts in the form of paycheck programs for businesses and individuals, the American economy was flush with excess capital.
Naturally, shuttered professional American sports leagues demanded a new outlet for speculative appetite, and sure enough surveys show that among individuals who received unemployment benefits during the pandemic, 20% of those funds were recirculated back into American financial markets.
Where’s the Money Going?
The coronavirus pandemic clearly brought in a wave of new retail traders into the financial markets. The surge in account openings in 2020 has continued into 2021: US brokers like Robinhood, TD Ameritrade, Charles Schwab, and Interactive Brokers added more than 2 million users in each of the first and second quarters of 2021.
In fact, Robinhood added more than 1 million users in January 2021 alone thanks to the surge in meme stocks like video game retailer GameStop (Ticker: $GME) and movie theater chain AMC (Ticker: $AMC).
Amid the
