Despite ‘bad quarters,’ Draft Kings remains bullish about future
During Friday’s earnings call, DraftKings CEO and Co-Founder Jason Robins painted a mostly positive picture of the company’s finances.
But that doesn’t mean there aren’t any headwinds, however minor in the scheme of things. In particular, sport bettors have had a field day cashing bets.
“We’ve had a couple really bad quarters in a row in terms of outcomes,” Robins said during the call. “This past quarter was looking really great until March Madness (when four No. 1 teams reached the Final Four). That does happen. We have analyzed that, and we are 100% confident that these are random outcomes.”
DraftKings on Thursday reported first quarter revenue of $1.409 billion, an increase of $234 million, or 20%, compared to $1.175 billion during the same period in 2024. DraftKings’ monthly unique payers increased to 4.3 million in first quarter, representing an increase of 28% compared to the first quarter of 2024.
Robins noted the company has seen fairly strong hold growth this year, although there was a bit of slowdown in April. He attributed that deceleration to “a sports seasonality sort of thing.”
“The NBA was a little bit weaker this year than some, but the playoffs have actually been picking up,” Robins said. “I don’t expect it to be too bad. I think it’s going to probably end up being high single digits to low double-digit growth, would be my guess in terms of overall handle.
“As a perspective, March was 11% up year-over-year for us, the quarter was up 16%, and then baseball is up about 16%. Those are some data points that might be helpful in thinking about where things are heading.”
DraftKings’ acquisition of Jackpocket ran into headwinds when it stopped courier operations in Texas when the state banned its services. Robins noted there are no plans to address the ban, given that the Texas state Senate will probably oppose it.
Robins also is concerned with recent tax hikes in Illinois and Maryland. Notably, bettors might seek to do business with unregulated operators.
“I think what’s unfortunately happening as states increase taxes is that alternate options are gaining share,” he said. “That’s something we’re making sure people understand. The illegal market is bigger than ever in terms of igaming, and obviously that’s in states that don’t have legal igaming. But those companies are going to create competitive offerings and push them in states that do have legal igaming if taxes are too high.”
Robins also did not rule out potential M&A deals, although there are no plans in the pipeline, notably in international markets.
“When it comes to international, it’s something we don’t need,” Robin said. “But we do believe that if the right opportunity emerges, if it’s something that fits well and creates the right synergies. But we don’t need it right now.”
After DraftKings numbers were released late Thursday, analysts were cautiously optimistic about long-term prospects.
“Despite back-to-back hold-affected quarters, we remain positive … given their positioning in the long-term growth trajectory and digital gaming’s historical recession resiliency,” wrote Truist Securities’ Barry Jonas.
“Our impression is that the most significant impact on the quarter and FY25 guide is the online sports betting outcomes, rather than Jackpocket, tax rates, prediction markets or any other ancillary event,” wrote Jefferies David Katz, noting that he expects “a positive reaction in the shares.”
Dig deeper
2025/01/17: Analyst bullish on online gaming sector
2025/02/14: DraftKings reports US$1.4 billion in revenue for fourth quarter
2025/05/08: DraftKings’ revenue rises 20% year-over-year in first quarter
2025/04/01: FanDuel and DraftKings made peace with California tribes over sports betting expansion
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