DraftKings reported a 30% upswing in first-quarter revenue from its core sports betting operations as wider legalization offset the impact of COVID-19.
Revenue hit $88.5 million as net losses widened to $68.7 million from $29.6 million in the year-ago quarter.
The company is newly consolidated, so the numbers stem from previously separate technology and wagering operations, making year-to-year comparisons inexact. On April 24, it went public after closing a three-way merger involving Draft Kings, SBTech and Diamond Eagle Acquisition Corp. The last of the three was founded by Harry Sloan, onetime CEO of MGM, and Jeff Sagansky, former CBS entertainment chief. Sloan is now vice chairman of DraftKings.
Major pro and college sports have been dark since mid-March, but in its earnings release DraftKings said new product offerings and an increase in states allowing betting has helped it improve its financial position. Without major sports like the NBA, NHL and Major League Baseball and the loss of NCAA March Madness, DraftKings had to get creative in the quarter. It established ways for customers to wager on eNASCAR as well as contests far outside the sports world, including Democratic presidential debates and TV shows like Survivor and Top Chef.
Management said it “does not anticipate an impact” from COVID-19 on its fiscal 2021 results or long-term plans. As more states legalize betting, the economic urgency created by the pandemic will play in DraftKings’ favor, the company added.
After a Supreme Court ruling cleared the way for legalized betting in New Jersey in 2018, other states have followed and now 14 of them are actively considering sports betting legislation. Illinois, Michigan, Tennessee and Virginia have all legalized online betting in the past year.
On a conference call with Wall Street analysts to discuss quarterly results, executives generally shied away from making predictions about the near-term decision-making happening in the sports world. Major League Baseball appears to be heading toward a possible summer restart, with the NBA possibly soon to follow.
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