2020: DraftKings Reports Strong Revenue Growth
DraftKings, a popular sports betting site in the US, has reported its earnings results for what’s its first fiscal year as a publicly-traded company after going public through a merger with a special-purpose acquisition company (SPAC) last year. It reported $322 million in 2020 revenue, up 98% from the previous year.
DraftKings’ annual revenue soared high in 2020 compared to the past year as it capitalized on a stronger betting market spurred by the legalization of online sports betting in more American states for growth. The company also did well getting new customers in existing legalized sports betting markets in the US.
For example, the state of Tennessee formally legalized mobile and online sports betting on the 1st of November, 2020 and saw DraftKings immediately swoop into the market. In just the first two months operating in the state, DraftKings processed over $300 million in bets, its earnings report noted.
In 2021, DraftKings held successful launches in the states of Michigan and Virginia after online sports betting became legalized there recently. The company now has a presence in 12 US states.
With the market for online sports betting getting stronger and DraftKings benefitting from it, the company has now raised its revenue projections for 2021 from between $750 million-$900 million to $900 million-$1 billion.
DraftKings cited several factors for raising its revenue forecast including stronger customer acquisition due to stay-at-home trends and a bigger-than-expected betting market in the state of Tennessee which it recently got into.
Though with rising revenues, DraftKings isn’t profitable, posting a net loss of $266.4 million in 2020, compared to a much smaller $33.4 million in 2019. Factors that contributed to the big net loss include high marketing spend and stock-based compensation.
In the US, 19 state legislatures have introduced legislation to legalize online sports betting, implying newer potential markets for DraftKings. It’s not likely that all the states that introduce such legislation will see it passed through but with 19 states doing so, it’s plausible that a handful out of that number will see the legislation pass through and expand the sports betting market reach for DraftKings as a result.
- DraftKings offers online sports betting services for varieties of sports and professional leagues in the US. It reported having 1.5 million monthly unique paying customers as of the end of 2020, with average revenue per such paying customer of $65.
- DraftKings (NASDAQ: DKNG) ended trading on Friday with a market value of $24.1 billion.