During its 2023 Virtual Investors Day on Tuesday, DraftKings touted its new “progressive parlays”. They explained that it could reach profitability from sports betting in new markets like North Carolina quickly, perhaps in fewer than two years.
Jason Park, chief financial officer at DraftKings, says that the company spent wisely to acquire customers in states during the “2018-2022 investment phase” of sports legalization. But, Park said, “In 2023, our contribution profit exceeded our fixed costs in quarter two of 2023, [and as a result] we project all states to produce a positive contribution profit (cash flow) in 2-3 years.” Park commented during an online earnings call with the media and investors on Nov. 14.
Sportsbooks like DraftKings typically pour money into marketing campaigns and promotional offers when a new state launches online sports betting. North Carolina online sports betting will launch in 2024, no later than June 14.
Progressive parlays could debut in NC sports betting market
A new product may be available for North Carolina sports betting when it launches in 2024: progressive parlays.
DraftKings touts this new offer as an exciting way for sports bettors to wager on multiple picks without an all-or-nothing outcome. This should interest North Carolinians who already show a strong interest in parlays.
A progressive parlay consists of 3 to 9 legs, but unlike a typical parlay, the bettor does not need to win every leg to get a payout. The progressive parlay pays out when a customer wins X number of legs, but not all.
For example, in a six-leg parlay example shared by DraftKings, the user only needed to win five legs to get a win, at odds a little lower than the six-leg odds. The launch date for progressive parlays is coming soon. DraftKings has applied for a patent on “progressive parlay” in the U.S. market.
“No major sportsbook operating in the U.S. offers progressive parlays,” said Robins. “If you love parlays but don’t like the ‘all or nothing’ nature of it … this will be the right product for you.”
How DraftKings will promote the new market to North Carolinians is unsure. They will likely offer promotions to allow customers to try the new markets at low risk.
No one knows what type of North Carolina sports betting promos will be available to new DraftKings customers in the Tar Heel State, but they’re likely to be fewer than what we’ve seen in states that launched in the past.
DraftKings ready to lead the pack in sports betting and igaming
DraftKings has challenged FanDuel at the top of the US sports betting pyramid in recent months, and the Boston brand plans to press its advantage.
“We have data now to [help us] launch in new states in [a] better way,” said DraftKings Chief Executive Officer Jason Robins. “There’s no ‘Hey, what do we do next,’ we’re more optimally strategizing to launch new markets.
“Improvements we’ve made to our same-game parlay technology have put us into a position where we have the best product in the industry.”
They have focused on being the best-prepared sports betting operator, and as a result, it ranks as a market leader, alongside chief competitor FanDuel.
“Our overall execution and preparedness for the start of every new sports season, especially the NFL, and relentless focus on the customer, contribute to where we stand in the market,” said Park.
DraftKings is optimistic about growth, projecting earnings before interest, taxes, depreciation and amortization (EBITDA) to be $400-600 million in 2024, $900 million to $1 billion in 2025, and $2.1 billion in 2028.
Those EBITDA figures are company projections based on existing states with legal sports betting and/or online gaming only. That’s with 50% of the U.S. population within states with OSB (online sports betting) and 10% online casino gaming. But if the market grows to 65% and 30% respectively in the next few years, DraftKings projects $3.6 billion EBITDA in 2028, which Park called “a meaningful increase.”