DraftKings Reports $875 Million in Revenue, Positive Adjusted EBITDA for Q2 2023

• DraftKings reported its Q2 earnings this morning
• The sports betting company reported $875 million in revenue, $72.9 million in positive adjusted EBITDA for the quarter
• Expects to launch in Kentucky on Sept. 28

The second quarter of 2023 showed some impressive results for DraftKings, as the company reported $875 million in revenue, an 88% increase compared to the second quarter of 2022, and achieved a positive adjusted EBITDA of $72.9 million.

DraftKings CEO Jason Robins presented the Q2 results this morning and predicted the sportsbook operator would achieve positive adjusted EBITDA again in the fourth quarter of 2023 and for fiscal year 2024.

“Revenue and adjusted EBITDA exceeded expectations in the second quarter,” Robins said during the earnings call.

Improved Revenue Outlook for 2023

In the fourth quarter of 2023, DraftKings expects to generate $150 million to $175 million of adjusted EBITDA and nearly $1.2 billion in revenue, Robins said. The company’s revenue and EBITDA guidance for fiscal year 2023 includes launches for both Kentucky and Puerto Rico, which DraftKings believes it will receive licensure for both.

“DraftKings produced outstanding results for the second quarter of 2023. We grew revenue at an impressive year-over-year rate, captured additional GGR share in a cost-effective manner, and maintained our focus on operational efficiency,” Robins said in the earning report. “The positive adjusted EBITDA that we generated in the second quarter exceeded our guidance, and we are well on our way to achieving positive adjusted EBITDA again in the fourth quarter of 2023 and for fiscal year 2024 and beyond. We are excited by the additional product features and functionality that we are introducing leading into football season and also look forward to another successful online sportsbook launch in Kentucky this fall pending licensure and regulatory approvals.”

Kentucky sports betting will launch on Thursday, Sept. 28. Robins said the company will likely launch its online sports betting product on that date and has already secured market access in the state. Moving forward, DraftKings also has plans to launch in North Carolina and Vermont in 2024, dependent on securing market access in both states.

The Bluegrass State’s launch came earlier than expected, DraftKings CFO Jason Park said, and will result in an estimated $20 million in revenue and a $30 million EBITDA loss for the company. Also, Ohio’s increase from 10% to a 20% sports betting tax rate will result in an estimated $10 million cost for DraftKings, he said.

When asked about Ohio’s sports betting tax increase, Robins noted that he expects other states to continue to tax sports betting at a “reasonable level.” Most states understand that if taxes are too high, the legal, regulated operators cannot compete with the unregulated, offshore operators that pay no taxes to a state.

Park said the company will be increasing its midpoint of its fiscal year 2023 revenue guidance to $3.5 billion from $3.185 billion and improving the midpoint of its fiscal year 2023 adjusted EBITDA guidance to $205 million from $315 million.

“We are acquiring new customers efficiently while simultaneously retaining and monetizing our existing players through rapid product innovation, less promotions, and higher hold from better bet mix,” Park said in the revenue report.

Healthy Growth For Customer Retention, Acquisition

The operator’s monthly unique payers (MUP) increased to a 2.1 million average monthly, an increase of 44% compared to the second quarter of 2022. The average revenue per MUP was $137 in the second quarter 2023, a 33% increase compared to the same period in 2022.

In 2023, 12 states representing approximately 24% of the U.S. population have either introduced legislation to legalize online sports betting or introduced bill that may result in sports betting referendums during an upcoming election. Additionally, five state that represent approximately 14% of the U.S. population have either introduced legislation to legalize iGaming or introduce a bill for an iGaming referendum.