Less Is More For Bad Boy DraftKings As American Sportsbook Posts Awesome Q3
Following an awesome Q3, less is more for “Bad Boy” US sportsbook DraftKings as it stands on the cusp of true profitability with full year losses now estimated to be half the US$215 million (£175.74m) previously predicted.
Across most metrics performance for the Nasdaq-listed sportsbook and iGaming operators was up, up, up in the third quarter, ending September 30.
Revenue, powered by new customers and DraftKings’ continued expansion in those US states regulating digital gambling, grew to US$790 million in Q3 (£645.75m).
The number of unique paying customers each month went up to 2.3 million, a 40 percent rise on last year. Revenue-per-paying-customer, correspondingly, surged 14 percent.
Thus DraftKings has adjusted its revenue expectations for 2023, posting a prediction of up to US$3.72 billion (£3.04bn), suggesting growth of 66 percent.
Accordingly, anticipated loss for this full year–measured as Adjusted EBITDA– will now be no more than US$115 million (£94m) – a massive improvement on a previous loss estimate of around US$215 million.
Two Jasons
“Our fantastic third quarter results demonstrate the positive impact of our product and technology investments as well as excellent preparation and execution by our entire organization,” affirmed Jason Robins, DraftKings’ Chief Executive Officer and Co-founder.
DraftKings has now provided initial financial guidance for next year, 2024, outlining expected revenues of between US$4.5 billion to US$4.8 billion (£3.67bn-£3.92bn), with Adjusted EBITDA in the range of US$350 million to US$450 million (£286.09m-£367.83m).
“We are poised for a rapid increase in Adjusted EBITDA as we anticipate strong revenue growth coupled with a scaled fixed cost structure will continue,” explained DraftKings Chief Financial Officer Jason Park.
“These trends provide for a long runway of margin improvement.
“DraftKings continues to acquire customers in an efficient manner, sustain customer engagement, improve its sportsbook structural hold and promotional reinvestment for Sportsbook and iGaming, and demonstrate fixed cost discipline.”
In terms of geographic expansion, DraftKings now offers mobile sports betting in 22 states, which collectively have about 45 percent of the US population.
They also provide iGaming in five states, which make up about 11 percent of the US population and operate in Canada’s populous Ontario province.
DraftKings, meanwhile, is also working towards launching its sportsbook product in Maine following an agreement with the Passamaquoddy Tribe and is looking to expand into Puerto Rico, North Carolina and Vermont after securing the necessary regulatory approvals.
These are super exciting times in the world of US sportsbooks and iGaming.
With the principal players; FanDuel, DraftKings and BetMGM; all approaching full profitability after spending hundreds of millions, if not billions, to stake out market share, the Big Three will need to harness all their power to beat-off the impending challenge of ESPN — the most storied name in US sports broadcasting that is now poised to enter the gladiatorial arena of American online sports gambling.
Watch this space.
