DraftKings’ Q2 2023 Earnings Exceed Expectations with “Outstanding Results”

DraftKings' Q2 2023 Earnings Exceed Expectations with "Outstanding Results"

DraftKings, the Boston-based U.S. sports betting giant, has reported a significant 88% increase in revenue for the second quarter of 2023, reaching $875 million.

In the company’s Q2 earnings report, published late last week, the DraftKings’ leadership outlined what they say led to that impressive growth. That included claims of efficient customer acquisition, innovative product offerings, and reduced promotional activity in more mature states.

“DraftKings produced outstanding results for the second quarter of 2023,” said Jason Robins, DraftKings’ CEO and cofounder.

“We grew revenue at an impressive year-over-year rate, captured additional GGR share in a cost-effective manner, and maintained our focus on operational efficiency.”

Strong Performance and a “Better Bet Mix”

Following the positive Q2 results, DraftKings has revised its 2023 revenue guidance upwards.

The company now expects a revenue range of $3.46 billion to $3.54 billion, up from the previously announced range of $3.14 billion to $3.24 billion. This updated range represents a year-over-year growth of 54% to 58%.

During the quarter, DraftKings made some successful gains on its top-dog sportsbook rival, FanDuel. In June, DraftKings came out in top in New York for the first time, taking first place in the biggest U.S. sports betting market with a $488 million handle for the month.

DraftKings also saw a 44% increase in unique monthly players over Q2 to 2.1 million, all part of strong retention and acquisition across its sportsbook and online casino products. The average revenue per player for the quarter was $137, a 33% increase compared to Q2 2022.

Jason Park, DraftKings’ CFO, highlighted the company’s changing strategy. Where it initially focused on big promotions to get players in, it has now built up a player base to focus on monetizing.

“We are acquiring new customers efficiently while simultaneously retaining and monetizing our existing players through rapid product innovation, fewer promotions, and higher hold from better bet mix,” Park said.

The company also improved its fiscal year 2023 Adjusted EBITDA guidance, now expecting a loss between $190 million and $220 million, an improvement from the previously announced range of a $290 million to $340 million loss.

State of Play and Expansion

DraftKings is currently live with mobile sports betting in 21 states, meaning 44% of the U.S. population has access to the platform.

The brand also offers online casino gaming in five states, reaching about 11% of the U.S. population.

The company plans to launch its Kentucky sports betting platform when the market for mobile sportsbooks opens on September 28.

It is also looking at a launch in the soon-to-be-legal North Carolina market, as well as Vermont and Puerto Rico, pending licensure and regulatory approvals.

“We are excited by the additional product features and functionality that we are introducing leading into football season,” Robins said in the earnings report.

“We also look forward to another successful online sportsbook launch in Kentucky this fall, pending licensure and regulatory approvals.”

Despite the positive Q2 results, the period also saw some hiccups. In in its home state, DraftKings had to speak with the Massachusetts Gaming Control Board twice.

Once was to discuss alleged non-compliance with tennis betting regulations, and once to complain that the regulator had dismissed its application to offer betting on the controversial Saudi Arabian-backed LIV golf tour.

DraftKings also submitted a $195 million offer in June for the U.S. operations of Australian sportsbook PointsBet, while a bid from rival Fanatics was also on the table.

Fanatics ended up delivering a higher $225 million bid, which PointsBet accepted. Speculation was DraftKings may have partly entered the race to force a higher bid out of Fanatics.

With revenues now looking at around $3 billion for the year after this positive report, it seems like DraftKings will retain its spot as one of the most popular U.S. sportsbooks for the foreseeable future.

Author: Paul Campbell