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DraftKings Thrives After March Madness: Record Profits
SportsGrid
Follow
5/13/2025
Category
🥇
Sports
Transcript
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00:00
Okay. So, you know, March Madness has come and gone. Now the sports books, you know, they love
00:05
to say that they're going to do amazing over the next few months, but let's be honest, they take a
00:09
little bit of a breath before the football season with the end of the NBA and the NHL coming. But
00:14
if you are a shareholder or if you are part of the DraftKings organization, it seems like you
00:19
have a lot to smile about today. Yeah. It's interesting that we're talking about a positive
00:24
for DraftKings after you mentioned March Madness, which, you know, you just can't talk about enough
00:29
how crazy it was for the sports books, came after a really tough NFL season. You had the higher seeds
00:36
won at an 82% rate. And that caused companies like DraftKings to have to cut the amount of guidance
00:44
they're suggesting for the entire year. DraftKings cut it by more than $100 million from these
00:49
customer-friendly sports outcomes. But despite that, they did have their most profitable quarter
00:54
ever, which is really interesting, you know, when you're talking about losing a lot of
00:59
sports outcomes. You're trying to think of how are they going to make money while they
01:03
are getting hit with the higher seeds winning. For DraftKings, it was all about improving
01:07
their margins, cutting down their promo spending. They have not been as generous with those,
01:12
like you mentioned, Craig. Maybe taking a breath before some of, you know, the bigger competition
01:17
during football season. So that helped them offset about $170 million that they took from
01:24
unfavorable sports results. That's kind of the results coming in lower than expectations.
01:28
And Wall Street was, you know, pretty confident in what they heard. The stock is up now, which you
01:34
always want to look at how the market is going to react to this kind of news. Another big highlight
01:38
for DraftKings has been live betting, which is something we've talked about being on the back burner
01:43
a little bit for these companies right now. But this was the first quarter where there was actually
01:47
more handle bet live than it was pre-match for a company like DraftKings. Overseas, that is very
01:54
much the case. But in the U.S., that has not been the case yet. So they're seeing some good returns
01:58
there from that product, which encourages higher margins. Customers are less likely to win on live
02:03
bets. They're also more likely to reinvest their money with a sportsbook if they win and not deposit
02:08
it and stay engaged, which is what they want you to do. So that's another really big path forward
02:14
for DraftKings. Part of their vision there is getting people to live bet better. And that takes
02:18
a lot of technological advancements, you know, decreasing the latency time and just making the
02:24
experience better overall for customers there so they can feel more comfortable with it. So
02:29
another pretty solid quarter for DraftKings, all things considered, when you talk about the sports
02:35
results and going into the next quarter, now they're going to be trying to do some more of the
02:39
same, expanding it to Major League Baseball and having that be a real focus before football
02:44
season gets underway and we're really in the crunch of things.
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