During the always entertaining and informative ‘Mad Money’ Lightning Round, charismatic host Jim Cramer shared his insight on DraftKings‘ future prospects, as he emphasised ‘it’s like a war out there for gambling stocks’.
He added his belief that until the sector comes to the realisation that it is “spending too much per customer”, then DraftKings will prosper even more so than it already has. Yet, in terms of a short term outlook, the cutthroat landscape US sportsbook, will likely mean it could be a ‘house of pain’ for investors.
The operator recently published its financial results for the third quarter of 2021, declaring a 60% revenue improvement year-over-year and continued user growth and engagement – growth metrics beloved by DraftKings private equity and hedge fund backers.
For Q3, ending September 30, 2021, DraftKings reported revenue of $213m, an increase of 60% compared to $133m during the same period in 2020.
It also detailed that it delivered strong growth in monthly unique players (MUPs) and average revenue per player MUP (ARPMUP) in Q3 2021 without contribution from the NBA and NHL, which resumed their respective seasons in Q3 2020 following suspension due to COVID-19.
Nonetheless, the group cited player-friendly NFL outcomes as being the reason for $25m negative revenue impact, when it came to revenue guidance. It detailed that during Q3, in spite of significant revenue increases, they reported net losses of $545m.
Jason Robins, Co-Founder, CEO, and Chairman of the Board, commented on the results: “DraftKings had a strong third quarter that highlights our team’s unique ability to drive engagement with our core customers while simultaneously launching new states and verticals and completing the complex migration to our own in-house technology ahead of schedule
“Since migrating, we have rapidly added innovative features and functionality to our top-ranked mobile sports betting app. We are also excited that our new growth initiatives, including DraftKings Marketplace and our content and media business, demonstrated promising early results in the quarter.”
DraftKings is now live with mobile sports betting in 15 states following successful launches in Wyoming, Arizona, and Connecticut, and is now live with igaming in five states following a successful launch in Connecticut.
Last week, the New York State Commission announced DraftKings amongst the nine applicants granted approval for a mobile sportsbook licence. Operators will pay an upfront $25 million licensing fee to enter NY sportsbook marketplace taxed at a cumbersome 51% tax rate.