DraftKings raises 2022 guidance after seeing revenue up 57% in Q2; opens Kansas pre-registration ahead of market launch

Sports betting giant DraftKings has reported revenue of $466 million for the second quarter of 2022, a 57% increase from the $298 million delivered in the same period last year. The positive performance has led the business to raise its revenue and Adjusted EBITDA guidance for the full year. Results were unveiled at the same time the company opened pre-registration in Kansaswith a slate of welcome offers for players in the Sunflower State.

Revenue for the company’s B2C segment grew 68% YoY to $455 millionnotwithstanding a less favorable sports calendar in Q2 2022. Additionally, overall revenue and Adjusted EBITDA outperformed the midpoints of their respective guidance ranges for the quarter: revenue was more than $30 million above; while Adjusted EBITDA outperformed by almost 40%.

DraftKings’ acquisition of Golden Nugget Online Gaming played its part in these achievements. Results for the three months ended June 30 include the operations of GNOG after May 5, the date on which the transaction was consummated; and after May 18 for Ontario, Canada, where DraftKings launched its sportsbook and iGaming products on that date.

“DraftKings had an excellent second quarter, exceeding expectations for revenue and adjusted EBITDA,” said Jason Robins, DraftKings’ co-founder, CEO and Chairman of the Board. “Customer engagement remains strong, and we continue to see no perceivable impact from broader macroeconomic pressures.”

DraftKings' CEO Jason Robins

Due to ongoing investments in core online gaming technologies, Robins expects DraftKings to be “in a strong position” from a competitive perspective as the company approaches the beginning of the NFL season, the biggest period of the year for US sports betting. The company remains “well-capitalized, ready to enter new markets” and confident in its ability to compete.

“We executed very well in the second quarter and outperformed the midpoints of the Q2 guidance ranges for revenue and Adjusted EBITDA,” added Jason Park, DraftKings’ CFO. “Our B2C segment drove revenue growth due to stronger than anticipated customer activity, while we continued to make progress on identifying and capturing operating efficiencies.”

As a result, the company is raising the midpoint of fiscal year 2022 revenue guidance by $15 million, to a range of $2.08 billion to $2.18 billion, which would equate to year-over-year growth of 60% to 68%. The business is also improving the midpoint of its Adjusted EBITDA guidance by $60 million to a loss of between $765 million and $835 million.

Further figures show that Monthly Unique Players (MUPs) increased to 1.5 million average monthly unique paying B2C customers, an increase of 30%. The company says this increase reflects strong unique player retention and acquisition across its products, as well as their expansion into new jurisdictions, partially offset by a decline in Daily Fantasy Sports MUPs.

Average Revenue per MUP also increased by 30% during Q2, to $103. The increase was primarily attributed to strong customer engagementa continued mix shift into DraftKings’ Sportsbook and iGaming products, and reduced promotional intensity compared to the same period in 2021.

New markets and potential launches

DraftKings is currently live with mobile sports betting in 17 states, which collectively represent approximately 36% of the US population. Moreover, the firm is also live with iGaming in 5 states, or about 11% of the country’s population.

As for potential new markets, during Q2 the California Secretary of State confirmed that an online sports betting initiative backed by DraftKings has met the signature threshold to qualify for November’s ballot. The company said it is “cautiously optimism” about the outcome. The proposal is publicly opposed by most of the state’s tribes, which have also qualified another initiative seeking to legalize sports gaming only on a basis at tribal casinos.

In Massachusetts, the legislature passed a bill that, pending executive action, would legalize retail and online wagering on professional and collegiate sports. DraftKings could seek to enter this state, which represents 2% of the US population.

Four of the jurisdictions where DraftKings has the potential to operate via a market access agreement or direct license – Maryland, Puerto Rico, Ohio and Kansas– have authorized mobile sports betting, representing about 8% of the country’s population. Pending license, it would bring the percentage of the population where the company expects to offer legalized betting to 44%.

Ahead of Kansas’ sports betting launch, and DraftKings’ pending licensure and regulatory approvals, the sportsbook has now announced a range of welcome promotions and bonuses for players in the state. Users signing up in the Sunflower State prior to the launch date and downloading the DraftKings Sportsbook App will receive four $25 free bets.

In addition, one random user who signs up early will be selected to receive a $100,000 free bet on launch day. DraftKings announced an agreement with Boot Hill Casino in Dodge City in May 2022, through which the company retail will be allowed to operate a facility there.

NFT and further announcements

As for other future plans, DraftKings is set to launch a new game called Reignmakers Football. It is described as a “next generation, NFT-powered fantasy football game” which is slated to debut on DraftKings Marketplace for kickoff of the 2022 football season. It marks an effort to position the company “at the growing intersection of gaming and digital collectibles.”

The game combines fantasy sports with blockchain and techniques such as collecting and upgrading in a way “designed to appeal to traditional and new collectors NFTs, fantasy sports players, and fans of online and tablet games.” Reignmakers Football will feature tiered Player Card NFTs of real athletes whose on-field performances will score points within weekly lineups similar to DFS.

Building upon a set of functionality and content expansions in Q2, including new markets for MLB and same game parlays for UFC, the company intends to keep improving its sports betting product in an effort to drive customer acquisition and retention. It now plans to offer a feature “that will allow users to combine multiple same game parlays.”

And lastly, the company is set to launch a new iteration of DraftKings’ Reignmakers gamified digital collectibles franchise focused on UFC, which will allow fans to build collections of their favorite fighters and use those NFTs to compete for prizes. Under DraftKings’ agreement with the UFC, its Marketplace will have access to intellectual property from over 500 different athletes on the active roster.

See DraftKings’ investor presentation with Q2 results here.

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