DraftKings increased revenue by more than 50% year-over-year, sparked by new state markets and higher hold percentages.
DraftKings' revenue grew by more than $400 million from the first quarter of 2023 compared to Q1 2024, per the company’s earnings release Thursday. This saw revenue climb to $1.175 billion in the first three months of 2024 against $770 million in 2023’s first quarter.
The company’s adjusted EBITDA, a more holistic metric of a company’s financial growth, increased during the same period from a loss of more than $220 million to a gain of more than $22 million.
“DraftKings’ performance in the first quarter of 2024 was outstanding, reflecting healthy revenue growth and a scaled fixed cost structure that positions us to drive rapidly improving Adjusted EBITDA,” said Jason Robins, DraftKings’ CEO and co-founder, in a statement announcing the results.
New states help bottom line
Robins attributed DraftKings’s growth in part to a pair of new state launches.
DraftKings launched in North Carolina and Vermont during the first quarter of 2024. North Carolina, one of the nation’s most populated states and home to several high-profile professional and college sports teams, accepted nearly $660 million in bets during its first partial month of operation.
State regulators don’t publicly announce figures by individual operators, but DraftKings is projected to be among the state’s leaders in all major revenue metrics.
DraftKings’ sportsbook is live in 25 states, encompassing nearly 50% of the U.S. adult population. The company expects to go live with its mobile sportsbook in Puerto Rico, per the earnings release, but hasn’t announced a launch timeline.
The release mentions several other states considering mobile sports betting legislation, but there appears no avenue for further sportsbook launches this calendar year. After nearly 40 states opened retail or mobile sportsbooks in the past six years, there could be zero the rest of 2024.
DraftKings’ online casino platform is live in New Jersey, Pennsylvania, West Virginia, Michigan, and Connecticut. There are no remaining active iCasino bills under consideration in any state.
Higher holds, acquisition efficiencies increase growth
DraftKings officials further attributed the company’s financial gains to higher customer hold percentages and better optimized promotional reinvestment.
Like fellow sports betting market share leaders FanDuel, BetMGM, and Caesars, DraftKings has seen revenues grow along with new parlay products. Parlays, single-game parlays, and newly introduced combined single-game parlays generate significantly greater operator hold percentages compared to standard straight bets. U.S. bettors have flocked to long-shot bets that can offer higher payouts, but these higher odds end up generating more money for sportsbooks long-term.
The earnings reports also mentioned streamlined promotional costs. DraftKings, like many of its competitors, has spent billions in promotions, free bets, and other marketing costs to attract bettors. After several years of massive losses, DraftKings has curtailed its free bets and advertising. Now, the company is refocusing on maximizing revenue from existing players.
That includes more and bigger parlays by offering additional player props for single-game parlays and the ability to stack these on other single-game parlays. Though the earnings release doesn’t mention parlays or SGPs, industry observers – and gaming stakeholders themselves – have routinely noted the importance of these higher-margin offerings to sportsbooks’ bottom-line success.
