DraftKings Sportsbook, like many companies, took a hit in the second quarter of 2020, seeing a quarterly loss of $161.4 million ($0.55 per share). But, it was not all bad news in the company’s report, as it ended the second quarter with $1.2 billion in cash and no debt.
The second quarter also saw growth by DraftKings, which completed its merger with SBTech and Diamond Eagle and went public on the NASDAQ. It also had sports betting launch in Colorado on May 1, as well as iGaming in New Jersey.
“We believe that the best product will ultimately win with the American consumer,” DraftKings co-founder, CEO and chairman of the board Jason Robins said in a statement. “As a technology-first organization, we will continue to focus on bringing new and innovative products to market that strengthen our engagement with customers and maintain our competitive differentiation.”
The losses were to be expected due to the COVID-19 pandemic, but DraftKings continues to expand aggressively, working on getting into Michigan (sports betting, iGaming), Virginia (sports betting) and Tennessee (sports betting).
Diversifying Its Offer
Despite most of the sports world shut down during the second quarter of the year, DraftKings was able to up its revenue in the second quarter to $71 million, compared to $57 million in the second quarter of 2019.
Part of that was DraftKings offering leagues it wouldn’t have considered previously, such as new fantasy sports, the UFC, golf, European soccer and Korean baseball. Now, with the NBA and NHL in their postseasons, Major League Baseball playing its regular season and the NFL on the horizon, there is hope that the company can see more growth in the second half of 2020.
DraftKings introduced fiscal year 2020 pro forma revenue guidance of $500 to $540 million, which would be year-over-year growth of 22 to 37 percent. The assumption is that all sports leagues continue as they are currently going and there isn’t another major shutdown due to the pandemic.
“The momentum we saw in June accelerated with the return of MLB, the NBA and the NHL in late July and early August, and, as a result, we are seeing revenue growth in the first part of Q3,” Robins said on an earnings call.
Since the end of the second quarter, DraftKings has continued to see positive growth. The company entered the Illinois market in early August at the Casino Queen Sportsbook near St. Louis.
The first DraftKings retail sportsbook in New Hampshire at The Brook casino in Seabrook opened on Aug. 12, while West Virginia became the third state — along with New Jersey and Philadelphia — to offer a DraftKings online casino in July.
DraftKings also expanded its presence in the golf world in July, becoming the first “official betting operator” for the PGA Tour.
“In golf, prior to this year, our top event of all time was the 2019 US Open. Since the restart of the PGA Tour, six PGA Tour events and The Match II have topped that major,” Robins said.
Robins said the company continues to look for more opportunities to grow, whether it is in new states or through different avenues of betting and gaming.
“The other thing I would say is that we are also very bullish on the overall market,” Robins said. “And if we can find assets that are very complementary as we grow our core businesses, that’s potentially attractive as well.”