DraftKings suggests US online market has $67bn potential
DraftKings stock has been sent soaring after it suggested a totally-legalized US online gaming market could eventually be worth over $67bn.
DraftKings, the sportsbook, iGaming and DFS operator, made the statement in its annual investors day, as it looked back on a successful 2020 and ahead to new growth opportunities.
Given trends established throughout the last year, and the pace at which new states are enacting online betting legislation, the company not only forecasts a future TAM value far above previous calculations, but also upgraded its long-term adjusted EBITDA target to $1.7bn.
Fourth quarter results place the current DraftKings market share at 30% of US online sports betting (OSB), and 19% of iGaming (both national highs). It is also active in more states than any other operator.
The company forecasts that the OSB and iGaming markets could respectively reach $22bn and $40bn in TAM value at 100% legalization, with DraftKings cornering $5bn-$7.3bn of this.
Successful cross-vertical migration has been a key aspect of the company’s rapid ascent in new markets, with its integrated central platform allowing for cross-product promotions, and ultimately a high conversion rate for turning FTP DFS accounts into real cash bettors.
DraftKings currently has more than 5m unique paid DFS users (20% increase on 2019) and has seen that the crossover from this to OSB and iGaming betting in the first year of state operation is around 30%.
High front-end marketing costs have also paid dividends, according to the report. In newly-regulated states the company has seen consistent customer and revenue retention across the first two years. Furthermore, the company reports that new markets repay circa 70% on a gross profit basis within the first 12 months, this figure rises to 254% by the end of year two.
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