DraftKings CEO Says Company Plans For More Expansion to New States and Canada

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DraftKings CEO Says Company Plans For More Expansion to New States and Canada
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After launching its mobile sportsbook in New York and Louisiana this month, DraftKings is looking to expand in other markets. These markets include Canada, California and Florida.

DraftKings New York began operating on the first day of the state’s Jan. 8 launch, and during the first 24 hours the company gained 100,000 first-time paid bettors, DraftKings reported during an earnings call on Friday.

By comparison, DraftKings acquired that number of first-time bettors over 17 days in Arizona, 170 days in New Jersey, 312 days in Pennsylvania and 344 days in Indiana.

New York Leads Nation in Mobile Wagering

With about 20 million residents, New York is the nation’s fourth most populous state. Three states with larger populations — California, Texas and Florida — do not have legal sports betting.

At last month’s launch in New York, online bookmakers began paying a 51% tax rate, equaling New Hampshire’s highest-in-the-nation rate, also at 51%.

In the first 30 days of New York sports betting, the state had nearly $2 billion in wagers, the highest total in the nation. That amount generated more than $70 million in tax revenue.

During the earnings call, DraftKings CEO Jason Robins said the company has heard “chatter” that legislators might lower the tax rate on mobile sports betting revenue. The New York legislative session began Jan. 5 and will on end June 2.

DraftKings is taking a “wait-and-see approach” to the possibility of a lower tax rate in New York, Robins said. He said that even without a lower rate, the company expects to be profitable there in two to three years.

Louisiana Kicks Off Sports Betting in Late January

Robins noted during the earnings call of DaftKings’ Jan. 28 launch in Louisiana, saying the state has fan bases for collegiate and professional sports teams.

In the first four days of mobile wagering in Louisiana, bettors placed $40.5 million in bets.

The competition to acquire new bettors in the state came with a cost. DraftKings and five other online bookmakers reported a combined $11.7 million in promotional play to attract new customers in Louisiana, according to the state Gaming Control Board. This led the bookmakers to report a combined loss for the four days of $9 million.

With a presence in New York and Louisiana, the DraftKings Sportsbook is operational in 17 states, representing 36% of the U.S. population. The company anticipates going live with its app in three additional jurisdictions where mobile wagering has been legalized: Maryland, Puerto Rico and Ohio.

DraftKings iGaming also is live in five states.

Florida Ballot Initiative Targeted for 2024

In other potential sports betting markets, DraftKings is “exploring” its options for placing an initiative on Florida’s 2024 ballot to allow statewide mobile wagering, Robins said.

An effort to gather enough voter signatures to get a mobile wagering measure on this year’s November ballot failed partly because of a compressed timeframe for collecting signatures and difficulties associated with the COVID-19 pandemic, he said.

The Seminole Tribe of Florida briefly made a mobile wagering app available to bettors statewide late last year, but the app was discontinued in a legal dispute.

DraftKings ‘Excited’ About Ontario

DraftKings also is working toward getting an initiative on the November ballot this year in California to allow statewide mobile sports betting, Robins said.

In the fall, Californians could be asked to vote on as many as four sports betting initiatives. An item backed by the tribes already has qualified for the ballot. If approved, this measure would allow in-person sports wagering at tribal casinos or horse tracks.

Meanwhile, bookmakers such as DraftKings and FanDuel hope to get an initiative on the ballot allowing them to partner with tribes on mobile wagering, with some profits going toward efforts to assist the homeless.

In addition, DraftKings is preparing for the April 4 launch of commercial mobile sports betting in Ontario, the most populous Canadian province. If Ontario were a U.S. state, it would rank only behind California, Texas, Florida and New York in population size.

“We’re pretty excited about Ontario,” Robins said.

In other developments, the CEO noted that sports commentator and former NFL player Mike Golic Sr. would host a weekly podcast for DraftKings. The podcast, also featuring Meadowlark Media personality Jessica Smetana, is expected to begin in the spring.

Revenue Report Shows Yearly Increase

In conjunction with the fourth-quarter earnings call, DraftKings released the following:

  • The company’s full-year 2021 revenue was $1.3B, a 101% year-over-year increase.
  • An average of two million monthly unique payers engaged with DraftKings each month during the fourth quarter of 2021, a 32% year-over-year increase.

Robins said DraftKings “exceeded our expectations” during the fourth quarter.

“We enter 2022 positioned to grow our market share, further optimize our user experience and continue to strengthen our multi-product suite of offerings,” he said.

During the past year, shares of publicly-traded DraftKings, headquartered in Boston, have fallen by 63% through Thursday.

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