Robins talks up DraftKings’ lottery and in-play opportunities
CEO Jason Robins provided a critical update today (February 14) on DraftKings’ strategic roadmap to achieve its ambitious $1 billion EBITDA target by 2025.
During the company’s earnings call for Q4 and the full-year 2024, Robins highlighted DraftKings’ focus on enhancing its live betting capabilities and leveraging its recent digital lottery acquisition to drive growth.
While DraftKings fell short of its initial EBITDA guidance for 2024, which ranged from $240 million (£191 million / €228.7 million) to $280 million, the company achieved a significant milestone: its first-ever positive EBITDA of $181.3 million. The variance in projections was, in part, due to customer-centric outcomes in NFL games during Q4.
When analysts sought clarification on future guidance, Robins remained somewhat reserved with details, yet he underscored the potential within live betting markets.
“We have several initiatives in the pipeline, and we believe that our investments in live betting will enable us to achieve EBITDA positivity by 2026,” Robins stated during the call.
He noted that in-play betting experienced a notable surge during the recent Super Bowl, which he characterized as “a very encouraging sign” for future growth. “US sports are exceptionally suited for in-play betting,” he asserted. “[As consumers mature,] we expect them to explore new sports and bet types, fostering increased engagement.”
DraftKings Banking on In-Play Betting Boom
Robins pointed to the success of in-play betting in the UK, where it now constitutes 70%-80% of digital sports betting revenue.
“As time progresses, we will continually innovate our offerings to enhance customer appeal,” he affirmed.
In line with this strategy, DraftKings acquired micro-betting specialist Simplebet in August 2023. This acquisition aims to facilitate more varied and rapid wagering options, ultimately reducing friction for the customer experience.
“Our acquisitions of Simplebet, Sports IQ analytics, and Mustard Golf provide us with the cutting-edge technology and analytics necessary to elevate the live betting experience,” Robins explained during the call.
Digital Lottery: A Catalyst for Cross-Selling
Robins emphasized that integrating emerging verticals would be crucial for driving earnings growth.
He noted the success of DraftKings’ Jackpocket product as a powerful cross-sell channel for betting and igaming. The company acquired this digital lottery app in February 2024 for $750 million, projecting it to generate up to $340 million in additional annual revenue.
“Jackpocket has proven exceptionally effective in facilitating cross-sells, particularly during its recent $1 billion jackpot campaign. I believe there is significant room for further investment here,” Robins stated.
“This strategy is particularly impactful in states with established sports betting and igaming, as the lifetime values (LTVs) are higher due to immediate cross-selling opportunities,” he continued. “In states where we can efficiently build a customer base, analogous to our success with daily fantasy sports (DFS), we see excellent potential.”
Exploring Cryptocurrency and Stable Coins
In a forward-looking statement, Robins expressed interest in potentially accepting cryptocurrencies, including stable coins, as part of DraftKings’ payment options. However, he emphasized that regulatory approval is a critical precursor.
“It’s definitely something we are considering,” he mentioned. “Regulatory bodies typically exercise caution regarding cryptocurrencies in the US. Ongoing pro-crypto deregulation at the federal level may influence state perspectives, but regulators must become comfortable with these innovations.”
Robins concluded by indicating that DraftKings would conduct a deeper evaluation of cryptocurrency acceptance if it becomes widely recognized as a payment method in numerous states.
As the gambling industry continues to evolve, DraftKings stands poised at the forefront, leveraging technological advancements and strategic acquisitions to redefine the customer experience and expand its market share.
