DraftKings CEO Jason Robins on Friday said the next market that is on DraftKings’ radar is Ontario sportsbooks, where legalized online sports gambling is expected to start in April.
During a fourth-quarter 2021 earnings call Friday, Robins reviewed overall financial results that are familiar to DraftKings Ontario watchers — increasing revenues and impressive customer acquisition figures coupled with growing bottom-line losses.
Ontario, if it a were a U.S. state, would be the fifth largest by population. Notably, along with online sports betting, it also offers iGaming, meaning Ontario online casino play, which is more lucrative than online sports betting.
“There’s been a gray market there for many years. … A lot of the operators we’ll be competing (against) have already been operating there and have had time to build customer bases,” Robins said.
He noted that DraftKings Casino Ontario is not projecting the same level of market share in Ontario and in Canada, in general, as in the U.S.
“We don’t have that early-mover advantage we have in the U.S.,” he said. “We’ll approach it the same way we approach everything else we do. It’s going to analytically based, we’re going to target two- to three-year paybacks. Depending on what we see in the data, we’ll adjust accordingly. It should be a good market. It has iGaming, it has sports betting. We already have a decent-sized database of (daily fantasy) customers there.”
The online markets can launch on April 4. DraftKings expects to go live that day.
The first sportsbook operators received approval in early February from the Alcohol and Gaming Commission of Ontario. DraftKings was not in the first batch of approvals.
DraftKings Loves New York
It took DraftKings New York less than 24 hours to acquire 100,000 first-time paid bettors in New York, Robins reported. To put that performance in context, Robins noted that it took 17 days to hit that same mark in for Arizona; 170 days in New Jersey; 312 days in Pennsylvania, and 344 days in Indiana.
“In our first 30 days, we acquired over 300,000 users in New York, which was 2.3-times the average for our other states in their first 30 days on a population-adjusted basis,” Robins said.
There’s no question, he continued, that customers are joining his company’s platform faster in New York than in previous states. DraftKings offers online sports betting in 17 states. It also offers iGaming in five states.
In January, New York’s opening month, DraftKings was third in handle and second in gross gaming revenue among six mobile operators.
“When the N.Y. market launched, there was some aggressive promotional media by some operators but DraftKings is committed to maintaining its disciplined approach to customer acquisition and it is targeting a two- to three-year path to profitability for the state,” Robins said.
A two- to three-year runway to profit in any jurisdiction has been DraftKings’ mantra.
Revenue Grows in Q4; Stock Price Dives
Looking at the company’s overall financial performance, for the fourth quarter of 2021, DraftKings revenue grew to $473.3 million, a 46.9% increase over the same quarter in 2020. However, the fourth-quarter net loss was $326 million compared to a loss of $243 million in fourth quarter 2020.
Since last spring, DraftKings’ stock price has been pummeled. It debuted as a publicly-traded company in April 2020 with a stock price in the low 20s. Friday, after the latest earnings report, DraftKings was hovering in the mid-to-high $17 range in afternoon trading.
What About Florida, California?
Two other huge markets, California and Florida, remain on DraftKings’ agenda but Robins had only the now-familiar observations regarding the No. 1 and No. 3 states respectively by population.
In California, Robins said, his company continues to work with other online gambling operators to push online sports betting with tax dollars going to address homelessness and mental health issues.
In Florida, Robins reviewed the failed effort by DraftKings and others to get a referendum question on the ballot in November that would have broadened the online sports market there. A petition that was required for the initiative to get in front of voters failed to get enough signatures. Robins blamed the constraints imposed by COVID-19 and a tight timeframe.
