DraftKings CEO Jason Robins and CFO Jason Park overcame technical difficulties to deliver their Q2 earnings call today in an online conference.
The call followed DraftKings' Q2 report, which showed a total of $874.9m in revenue, as well as the H1 revenue almost doubling to $1.64bn, when compared to year-on-year. Crucially, loss from operations showed a huge improvement, while DraftKings was finally EBITDA positive for the quarter.
Product enhancements
Robins started off the call by discussing that same-game parlays had been a key factor here, calling them a “huge part of the story.”
He went on to say that, at DraftKings, the team is “proud of relentless focus on efficiency and expenses in past 12 months,” which has resulted in the loss from operations reported at just $69m.
Park went on to explain that the amount of customers who had been successfully “transitioned” from National Basketball Association (NBA) markets to Major League Baseball (MLB) ones had “exceeded expectations.”
Robins went on to say that, at DraftKings, the team is “proud of relentless focus on efficiency and expenses in past 12 months
Not only had this strategy paid off for the company in expanding the betting options players use, but Robins and Park also praised the myriad of live-betting options which have been added to the sportsbook too.
Gambling Insider must raise the question: are same-game parlays key to the industry-wide EBITDA improvements firms have made across the board?
Parlays have always been a key revenue driver for sportsbooks but, with the personalisation and extra engagement of betting on several aspects of just one game, their impact (as well as that of BetBuilders) has no doubt aided DraftKings – and its peers.
Improvements in efficiency
As for the business side of things, there were also a few discussions about the dealings that have been completed behind closed doors.
In regards to cost-cutting measures, especially in relation to reducing the losses Park and Robins quoted that the “low-hanging fruit has now been picked.”
As for news on potential mergers and acquisitions, Robins was dismissive: “It’s about to be the most important time of the year seasonally for us, with the NFL and College Football calendar, then NBA. So this is when we acquire the most customers and have the opportunity to acquire the most market share. We, as a team, are laser-focused on executing.”
Robins on Ohio: “Most governments understand that if you start taxing this too high, you’re defeating the purpose because it makes it impossible for the legal operators to compete with illegal operators. There’s great awareness of that among state regulators so I’m optimistic they will keep it at a reasonable level”
Golden Nugget
Another focus of the call was the previous acquisition of Golden Nugget Online Gaming (GNOG), which was finalised in May 2022 for a value of $1.56bn.
Of course, some speculation arose around this matter, as while GNOG did feature a fully integrated sportsbook, aligning with the DraftKings brand, it also came with a full online casino and live dealer division too.
When commenting on their plans for operating GNOG going forward, Park and Robins stated: “As of now, we still think of Golden Nugget as more of a casino brand than a sports betting brand.”
So, while DraftKings may have started out as primarily a Daily Fantasy Sports (DFS) company, it has found its footing in the sports betting scene over the past few years, with the expansion into the online casino scene seeming only natural.
DFS still going steady
As for its DFS offerings themselves, the executives in the DraftKings call said: “DFS has had a great year. We’ve made improvements to the products – it's been a really exciting year for DFS and we are continually adding more customers.
“We’ve seen really strong crossover for DFS in new states and it continues to be a source of new engagement.”
In its recent Q2 report, DraftKings set new guidance of adjusted EBITDA of between negative $190m and negative $220m for the full year, which was an improvement from previous estimates of negative $290m to negative $340m.
This was expanded upon in the call, where Park and Robins seemed confident this would continue to improve going forward, “we definitely expect to be EBITDA positive in all four quarters in the future”, as opposed to seeing positives seasonally.
Robins on Nevada: "Yeah, we’re definitely interested in getting into Nevada. It’s a really important market for gaming but it does have in-person registration, so I would tamper expectations there. But being able to give Nevadans that option to try the DraftKings product is something we are definitely exploring"
Ohio and Nevada
Robins was also asked about taxes. In early July this year, Ohio lawmakers doubled the tax on sports betting operators' revenue, bringing it up to 20%.
Commenting on this, Park and Robins said: “Most governments understand that if you start taxing this too high, you’re defeating the purpose because it makes it impossible for the legal operators to compete with illegal operators.
“There’s great awareness of that among state regulators so I’m optimistic they will keep it at a reasonable level.”
Finally, when asked about any potential expansion into Nevada, the home of Las Vegas, Robins responded positively:
“Yeah, we’re definitely interested in getting into Nevada. It’s a really important market for gaming but it does have in-person registration, so I would tamper expectations there.
“But being able to give Nevadans that option to try the DraftKings product is something we are definitely exploring.”
