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3. DraftKings
Financials: DraftKings reported a 39% increase in revenue YoY, reaching $2.3bn in the first half of 2024. Their adjusted EBITDA was $150.4m, a significant improvement from a loss of $148.6m the previous year.
Strategy & Impact: The company utilizes its strong brand recognition and DFS database to swiftly capture market share in new states. Recently, it has gained traction in the US igaming sector with a tri-brand strategy.
Geographic Reach: Primarily focused on the US market, DraftKings has closed its UK DFS operations but is considering expansion into Latam as a way to diversify revenue streams.
Influence & Leadership: A founder-led organization, DraftKings was strategically positioned when PASPA was repealed. It’s a leader in innovation, largely due to its dedication to in-house product development.
Ascending to the podium this year, DraftKings maintains a strong presence in the US with its online sportsbook spanning across 25 states, along with Washington DC and Ontario, Canada.
However, with the previous rapid pace of state sports regulation slowing, DraftKings expanded into related areas by acquiring Jackpocket, a prominent lottery courier app. Management believes the $750m acquisition, completed in May, will enhance player acquisition. Notably, Jackpocket’s customer acquisition costs are approximately 80% lower than those of DraftKings.
Given that lottery couriers often attract younger, digitally savvy users—and considering that lottery is the most popular betting form in the US—Chris Grove of Acies Investments called the acquisition a “watershed moment.”
DraftKings CEO Jason Robins has highlighted the company’s stringent criteria for M&A, which was evident in August with the acquisition of micro-betting supplier Simplebet. This followed the earlier acquisitions of odds provider Sports IQ and Mustard Systems’ golf pricing business, Dijon Systems, in October. These purchases highlight the drive among US companies to acquire rather than develop new technologies.
In the realm of igaming, DraftKings benefits from a multi-brand approach. It offers casino services in five states and Ontario, while Golden Nugget Online Gaming is accessible in three. Additionally, Jackpocket operates an online casino in New Jersey.
In Q2, GNOG was fully integrated into DraftKings’ platform, alongside new in-house game releases and a UI upgrade across both brands to enhance game discovery. The company’s average monthly unique paid users across all platforms reached 3.4 million in Q1, dropping to 3.1 million in Q2 due to a lighter sports calendar, yet still marking an increase of one million from Q2 2023.
Despite these advancements, the company faced a setback in August when it proposed a ‘surcharge’ on customers’ net winnings in states with tax rates above 20%. This led to a drop in DraftKings stock and considerable customer backlash on social media.
Two weeks later, the company reversed its decision, coinciding with Flutter’s announcement that FanDuel would not impose a similar charge. Was this timing just happenstance?
If you’re fortunate to be among the Power 50 operators, ensure you reserve your spot at the Power 50 Summit next April.
The post EGR Power 50 2024: 3. DraftKings first appeared on EGR Intel.
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