DraftKings posts $790m Q3 revenue; still without profitability
The operating loss for the sportsbook operator reached $286.6m, after a brief Q2 reduction to only $69m made it look as if income was in sight—perhaps Q4?
Key highlights
– Q3 revenue increased 57% year-on-year to $790m
– Operating loss, after steadily reducing over the year to a comparatively low $69m in Q2, is $286.6m in Q3
– Adjusted EBITDA achieved a negative result of $153.4m, up annually from the negative result of $264.2m in 2022
– Monthly average revenue per bettor up 14% to $114
Gaming America has been watching from the sidelines as DraftKings managed to reduce its loss each quarter, but Q3 was not destined to be the period where the sportsbook operator achieved profitability. Operating loss increased from $69m in Q2 to $286.6m in Q3. However, this is still a reduction in loss when considering last year’s third quarter loss of $455m.
A revenue increase from $502m to $790m annually shows promise, as does the 14% year-on-year increase of the sportsbook’s monthly average revenue per bettor to $114. Revenue guidance has been raised for fiscal year 2023 from a range of $3.46bn – $3.54bn to a range of $3.67bn – $3.72bn.
DraftKings generated a Q3 adjusted EBITDA of minus $153.4m, and the release states that this has allowed the company to raise its 2023 adjusted EBITDA guidance to minus $105m from minus $205m. In Q2, DraftKings achieved a positive EBITDA of $72.9m.
For fiscal year 2024, DraftKings is also looking ahead to a revenue guidance of between $4.5bn – $4.8bn (over 25% year-on-year growth, based on FY2023 midpoint results and overall 2023 guidance).
DraftKings CEO and Co-Founder Jason Robins commented, “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.
“Our new and differentiated features and functionality have created a user experience that sustains engagement for our mobile sports betting and iGaming customers. We also delivered another successful online sportsbook launch in Kentucky and look forward to additional launches in Maine and in North Carolina, pending licensure and regulatory approvals.”
The company has recently reached an agreement with the Passamaquoddy Tribe for the upcoming Maine launch, and has also submitted a bid to Vermont, as the state is currently reviewing sports betting proposals.
The sportsbook is currently live in 22 states, while DraftKings iGaming offerings are live in five states. DraftKings is also live with both sportsbook and iGaming offerings in Ontario, Canada.
During the third quarter, DraftKings had some memorable ups and downs in addition to the above, as it began its mini rebrand with a new slogan; featured a new DraftKings Network show with Mike Golic and Mike Golic Jr; held a ribbon cutting at its Queen Baton Rouge sportsbook; and posted an official apology after running promotions for a 9/11-themed ‘Never Forget Parlay’.
During October’s Global Gaming Expo, Robins sat down with FanDuel CEO, Amy Howe, to discuss the competition and state of the US sports betting market. Robins commented on the topic of unregulated betting, stating, “There are millions and millions of people that are just like, ‘I come to Vegas, I’ve been betting with my bookie using the offshore.’ Our goal is to try and get them here.”
By ‘here,’ the DraftKings CEO probably means the DraftKings sportsbook app, specifically, but generally refers to betting within a regulated, legal betting market. Robins was also asked to defend DraftKings, concerning cease and desist letters sent by some states regarding the nature of fantasy products. (Florida, though it sent letters to other operators, did not target DraftKings).
Robins spoke on behalf of fantasy operators, saying, “In the end, we expect to be treated the same way, so if you want to regulate something, regulate it, if you don’t, don’t. I don’t think that having inconsistent rules for different companies is in the best interest of the consumer or competition.”
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