DraftKings eyeing Nevada sports betting expansion as CEO plays down M&A chatter

DraftKings CEO Jason Robins has revealed that DraftKings is looking to expand its sports betting operations into Nevada for the first time.

Speaking as part of the Boston-headquartered operator’s Q2 2023 financial earnings call, Robins said the firm was “definitely interested” in expanding into the Silver State, however he moved to temper expectations for the expansion to result in a significant boost for the company’s finances.

“We’re definitely interested, Nevada is obviously an important state for gaming,” Robins explained.

“There’s a robust sports betting market there. It is in-person registration so I would temper any expectations for a possible meaningful contribution there, but I do think it’s an important state because people go there who are our customers and they want to be able to make bets.

“I think being able to give them that option, as well as to be able to access the Nevadans that are now betting with others but would like to try DraftKings’ product, is definitely something that we’re exploring,” he remarked.

Despite the Nevadan market being one of the oldest and most established in the US, with both legal retail and online sports betting markets, DraftKings has never operated there, with the state’s sports betting market including operators with retail casino footprints, including Caesars and MGM Resorts.

DraftKings opened a 90,000 sq ft technology hub in Southwestern Las Vegas in March, the firm’s second largest office aside from its Boston headquarters.

Elsewhere, another market where DraftKings is eyeing a potential significant revenue contribution is Kentucky, with the operator estimating a revenue boost of $20m in 2023, but with an inverse adjusted EBITDA headwind of $30m as it looks to launch in the state by September 28.

Addressing this headwind, Robins remained optimistic about revenue growth in what he predicted to be a “really great” second half of 2023, with further launches mooted in North Carolina and Vermont.

“Right now, we feel like Kentucky is going to provide a great opportunity for us to go and invest in acquiring customers,” Robins said.

“In our existing states, there’s also several new states that haven’t had a full NFL season. Massachusetts hasn’t had any NFL season and Ohio didn’t launch until January last year, so there should be a lot of upside in any customer acquisition numbers in H2 this year,” he added.

During Q2, DraftKings hit the headlines with a $195m bid to acquire PointsBet’s US division, gazumping an earlier $150m bid from Fanatics Betting and Gaming (FBG), and leading to criticism from FBG that DraftKings was looking to block a potential rival from entering the US sportsbook market.

DraftKings eventually withdrew from the bidding process, clearing the way for FBG to submit a $225m improved bid for PointsBet US, a deal which is currently in the final stages of completion.

For his part, Robins would not be drawn on future M&A opportunities for DraftKings, choosing instead to focus on what he dubbed a “great quarter” for the business and a potentially busy second half of the year.

“It’s about to be the most important time of year seasonally for us,” the DraftKings CEO said.

“We have fall coming up with the NFL, the college football calendar and the NBA. There are lots of things happening this fall.

“This is when we acquire the most customers, when we have the biggest opportunity to gain more market share and when we generate the most revenue, and the most EBITDA.

“We as a team are laser-focused on executing and everybody’s really dialled in now. There’s always talk of things happening in the background and we have small teams that make sure they’re aware of what’s going on but as a company, we’re very focused on executing and winning in the US,” he added.