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DraftKings will not get complacent after achieving a leadership position in the US online sports betting and iGaming market.

That was the key message from CEO Jason Robins yesterday during the company’s 2023 virtual investor day event.

The event was held one month after DraftKings was crowned as America’s online gambling market leader by Eilers & Krejcik Gaming (EKG), overtaking long-term incumbent FanDuel.

We’re number one

“We remain laser focused on executing and winning in the US online gaming industry,” said Robins during his opening remarks.

He said the company had secured top spot due to a variety of factors, the most important being the development of a market-leading product.

“We’re not satisfied just because we reached number one,” said Robins, who believes DraftKings’ share can continue to grow in the future as the overall US market expands.  

“We’re very excited about continuing to do the things that got us here and will continue to maintain and extend our lead,” he added.

Preference for product

Robins believes it is critical to have the best technology and insisted the operator would not slow down development in this department.

He described the DraftKings product as “extremely strong” and said the firm’s competitive differentiation advantage was both “real and sustainable”.

DraftKings has owned its own technology since Q3 2021, having vertically integrated a proprietary sports betting engine during the same quarter.

This has enabled the business to roll out upgrades like single wallet functionality, Robins said. A scalable regulatory platform has also allowed the brand to enter new states at pace.

“We plan to continue to innovate at a rapid velocity,” said Robins. “We offer products that are highly differentiated with the only limit being our own imaginations,” he added.

DraftKings currently employs 1,500 product engineers who will deliver approximately 13,000 independent product updates this year alone.

The latest product initiative has seen DraftKings improve its parlay betting potential with the imminent launch of new Progressive Parlays.

Previous guidance smashed

At its previous investor day in March 2022, DraftKings set out a long-term target to achieve online sports betting GGR share of somewhere between 20% and 30%.

On a trailing three-month basis, however, it has outperformed that target and currently boasts a 39% handle share in the US and a 37% GGR share.

This outperformance has helped establish DraftKings as the new US market leader and is not just limited to sports betting.

For iGaming, DraftKings boasts a GGR share of 27% on a trailing three-month basis, against a previously communicated long-term target of between 20% and 25%.

Increased market potential

Looking at the wider US online gambling market, DraftKings said states were growing faster than anticipated.

The operator therefore expects the total addressable market (TAM) in the US to increase from $20bn this year to approximately $30bn in 2028.

Crucially, this forecast excludes new state launches. It includes only the existing states that were used to inform DraftKings’ financial guidance for full-year 2024.

The operator recently raised full-year 2024 guidance to revenue of between $4.5bn and $4.8bn and adjusted EBITDA of between $350m and $450m.

Looking longer-term, DraftKings now forecasts adjusted EBITDA of $1.4bn in 2026 and $2.1bn in 2028. Those figures are again based on existing states, as well as the assumption that DraftKings maintains a 30% GGR share of the overall market.

Future regulation upside

Robins did not comment on the costs associated with new state launches, but said that any additional state legalisation would add “significant upside” through revenue growth and additional long-term adjusted EBITDA.

“In fact, there’s potential for up to an additional $6.2bn of annual adjusted EBITDA from further OSB and iGaming legalisation in the US,” he told investors.

DraftKings previously forecast that 65% of the US population would require access to regulated sports betting for the company to achieve adjusted EBITDA of $2.1bn, as well as 30% of the population to have access to iGaming.

However, the company now believes it can reach that target based on existing states only.

“Any further legalisation would provide enormous upside beyond that,” added Robbins.

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