The rapidly growing online gambling market in the US is starting to show some of it’s early issues for certain gaming entities.
One of those large entities, DraftKings, released its Q4 results in February as concerns arose as its stock had fallen by 22%.
The online sportsbook also projected a $825 – $925 million loss as the company spent just under a total of $1 billion in sales and marketing last year.
Legal Sports Reporter, David Gouker, spoke on DraftKings financial results and the reasoning behind the loss in stock.
“DraftKings are not great. Trading from the heavy days of $70, now trading under $20,” stated Gouker.
“You said the Q4 results were not taken well, they’re going to lose just under a billion dollars for this year and I don’t think that’s what people are expecting. DraftKings just pretty much spewing money to keep its market share and that’s not even to be number one in the market.
“The spend is going to be even worse in Q1 here when they are spending to get ramped up in New York, to try and get going on that launch.”
The panellists of the podcast highlighted that the New York betting topped up to $1 billion in revenue, and that’s only halfway through February.
It is easy to see why online sportsbooks such as DraftKings are willing to spend hundreds of millions of dollars on a potentially giant market like New York.
“Reports have been talking about how many customers they have, Caesars say they have half a million, DraftKings say they have 300,000. But it’s more interesting to see how it’s starting to take shape,” commented Brad Allen, reporter for LSR.
“Caesars were the biggest company when they had that ‘$300 Offer’ compared to 1,000 from the other two. This last week FanDuel were leading in handle even if they actually lost money on revenue, DraftKing second, Caesars third and then BetMGM a kind of distant fourth. So kind of starting to change what we see in other states around the US.”
There also came the shocking industry news that Caesars were pulling all advertisements as a part of its marketing spend.
“It’s quite a sudden turnaround,” stated Allen.
“It was six months ago where (Tom) Reeg (Caesars CEO) was on these calls saying we’re going to spend a billion dollars and then six months later he comes out and says we’ve done it.
Allen added: “There are some analysts out there who had no doubt saying ‘you know maybe the Caesars product wasn’t actually ready for prime time’. So, if you’re spending a billion dollars on advertising and you’re directing them to this product that as we saw in New York, it fell over basically it wasn’t up to the task. People were complaining about it.”
Panellists of the podcast also discussed Mobile Arkansas sports betting launch and the tribal opposition against sports betting in Ontario, Canada.
