DraftKings CEO: No impact from inflation on online gambling revenue
19:50, 6 May 2022
DraftKings’ (DKNG) 34% year-over-year revenue growth was fueled by first-time users and new product launches, as company executives noted sports gambling is relatively unaffected by inflation. DraftKings stock gained 4.23% on the mixed earnings, released Friday, which saw earnings-per-share (EPS) miss, but with revenue beating analyst expectations.
Rendering of the DraftKings Sportsbook at TPC Scottsdale – Photo: PGA TourBoston, Massachusetts-based DraftKings reported a $467m (£378.5m) net loss, or $1.14 per share, on $417.2m in revenue and raised full-year revenue to a $1.93bn to $2.03bn from the previous $1.85bn to $2bn range. Additionally, DraftKings narrowed its full-year EBITA loss to $760m to $840m from $825m to $925m.
DraftKings stock rose slightly on the news to a $15.04 session high from Thursday’s $14.43 closing share price on over 32.4 million in trading volume, versus the 41.1 million daily average, according to data maintained by Nasdaq. On the day, DraftKings closed down 8.87% to $13.15 amid a broader market sell-off.
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DraftKings Inc. (Nasdaq: DKNG)
Inflation has 'no impact' on sports betting revenue
New monthly users increased to two million per month over the quarter, a 29% increase from the year-ago first quarter and the betting handle increased in each of the 15 states it currently operates in.
Both CEO Jason Robins and CFO Jason Park said on the subsequent earnings conference call the current inflationary environment hasn’t negatively impacted user growth.
“We are not seeing any impact from inflationary pressures on customer demand,” Robins said on the call. “Cohort-level data has remained very healthy and our path to profitability has become more clear.”
CFO Park added he saw “no sign of macroeconomic factors impacting our customer engagement.”
Is gambling inflation proof?
Thomas Mancuso, President of the vice-focused exchange-traded fund (ETF) The B.A.D. Investment Co., which holds DraftKings stock concurs, to a point.
“I wouldn’t say sports betting is inflation-proof, bettors are still betting $500, not $550 to cover inflation,” Mancuso said. “But gambling, like alcohol, is certainly less affected by inflation.”
Overall, despite the near-term headwinds, Mancuso remains bullish long-term on DraftKings stock, saying that within three to five years he could see it matching its $71 per share highs seen last March.
Boosting user growth for DraftKings, noted DraftKings’ Robins was the Super Bowl and the NCAA Tournament, a three-week college basketball tournament that took place from 17 March through 4 April.
For the Super Bowl, fisrt-time online bettors increased 77% year-over year, Robins noted, while the NCAA Tournament opening round weekend, Robins said first-time online bettors increased 42% year-over year.
B.A.D. ETF (NYSE Arca: BAD) YTD
B.A.D. ETF (NYSE Arca: BAD) YTD – Photo: TradingViewNew products drive user growth
New product launches helped fuel new engagement with current users trying its new iGaming and non-fungible token (NFT) platforms. For example, 43% of DraftKings mobile sports betting users also engaged with our iGaming product in the states it is available and 54% of iGaming handle came from DraftKings-developed games, Robins added.
Launched in tandem with the NCAA Tournament, DraftKings Marketplace, the Primetime NFT Series was “designed to deepen engagement with DraftKings during these defining moments,” Robins said. “DraftKings NFTs receive cross-product utility and bonuses only available at the DraftKings ecosystem.”
“NFT business suits them well, they are kind of like sports cards,” B.A.D. Investment’s Mancuso added. “DraftKings has the audience.”
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