EGR Power 50 2024: 3. DraftKings

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3. DraftKings

Financials: Revenue surged 39% year on year (YoY) to $2.3bn for the first half of 2024. Adjusted EBITDA for the same period was $150.4m, compared with a loss of $148.6m the prior year.

Strategy & impact: Leverages its powerful brand recognition and DFS database to quickly take market share in new states. Has taken market share of late in US igaming, now with a tri-brand offering.

Geographic reach: A US-centric operator. The UK DFS business was recently shuttered, but Latam expansion would seem a logical play to diversify its revenue streams.

Influence & leadership: This founder-led business was in the right place at the right time when PASPA was struck down. It has also been at the forefront of innovation thanks to in-house product development.

Stepping up onto the podium this year, DraftKings remains a formidable force in the US with its online sportsbook footprint covering 25 states, plus Washington DC and the Canadian province of Ontario. 

Yet, with the previous brisk pace of state-by-state sports regulation slowing to a crawl, the Boston-headquartered firm expanded into an adjacent vertical by acquiring leading lottery courier app Jackpocket. Completed in May, management has insisted the $750m deal will bolster player acquisition. We also learned Jackpocket’s customer acquisition costs (CAC) were around 80% lower than DraftKings’ CAC.

With lottery couriers typically attracting a younger, digitally native player – and with lottery generally the most popular form of gambling in the US – Acies Investments’ Chris Grove described the transaction as a “watershed moment”.

DraftKings CEO Jason Robins has stressed there is a “very high bar” where M&A is concerned, yet that high bar was met in August when micro-betting supplier Simplebet was purchased. The swoop came three months after DraftKings snapped up odds provider Sports IQ, while Mustard Systems’ golf pricing business, Dijon Systems, was bought in October. These deals reflect the rush among US firms to buy rather than build.

As for igaming, the operator benefits from a multi-brand strategy; DraftKings offers casino in five states and Ontario, while Golden Nugget Online Gaming (GNOG) is available in three. Jackpocket has an icasino in New Jersey, too.

GNOG was fully migrated onto DraftKings’ platform in Q2, plus new in-house titles were released and the UI upgraded across both brands to improve game discoverability. Average monthly unique paid users across the group and all verticals hit 3.4 million in Q1, before slipping to 3.1 million in Q2. This was due to the lighter sporting calendar, although it was still one million more than Q2 2023.

Despite these gains, there was a very public misstep in August with plans to introduce a ‘surcharge’ on customers’ net winnings in states with tax rates north of 20%. The move triggered a sell-off of DraftKings stock, while customers vented their anger on social media.

But two weeks later, bosses abandoned their deleterious idea, the U-turn executed straight after Flutter confirmed FanDuel wouldn’t introduce a similar charge. Coincidence?

If you are lucky enough to be ranked a Power 50 operator, secure your place at the Power 50 Summit next April.