DraftKings Outpaces Q2 Estimates, Cuts Promo Spending to Dodge Summer Sports Lull
Rich Graessle/Icon Sportswire via Getty Images. Pictured: Citizens Bank Park.
DraftKings stock rose 10% ahead of its quarterly earnings call Friday, when the company announced favorable numbers considering a lack of sports to bet on during the Summer.
It reported $466 million in revenue for Q2, $30 million higher than estimates and an increase of 57% compared to the same period in 2021.
CEO Jason Robins told analysts the company outpaced expectations by drastically cutting customer acquisition costs and sharpening its tech.
It spent $197 million on sales and marketing in Q2, a $124 million drop from Q1.
Sportsbooks Cut Spending Across the Board
Those promo reductions are in line with what rival companies like Caesars Entertainment and MGM Resorts reported during their earnings calls this week.
Sportsbooks have pulled back on acquiring new customers as no state has launched online sports betting since January.
Up north, DraftKings projects to account for 10-20% of the Ontario market, which launched iGaming and sports betting earlier this year.
Meanwhile the freshest U.S. markets, like New York, are starting to mature, Robins said.
“As far as customer giveaway promotions, I think New York is a good case study where it's started to come back,” Robins said. “We’ve seen in existing states a decline each year since launch year, and we expect that to continue to be a case.”
Spending to Increase with New Markets
DraftKings has market access deals in Ohio, Kansas, Maryland and Puerto Rico — which should all launch in or by 2023.
California came up repeatedly during the call. One of several ballot options before voters during the November election could make the Golden State the biggest legal online market.
“Obviously there’s a mix of new states coming in. I’m sure in California if they go online before next NFL season, you’ll see more promotion spending in that state,” Robins said.
But CFO Jason Park said the company is still planning for “meaningfully slower fixed cost growth for 2023” and is focussed on leveraging its existing resources.
It will continue to push its Same Game Parlay Product, which soon bettors will be able to combine into multiple Same Game Parlays, Robins said.
FanDuel already touts a similar feature.
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