Just over three months after DraftKings launched its sports wagering product in New Jersey, the vertical already accounts for a large chunk of the company’s revenue.
In a recent panel at the ICE Sports Betting USA conference, CEO Jason Robins revealed that sports betting makes up 20% of DraftKings’ entire business. What’s more, the company so far only operates in two states.
In New Jersey, the numbers are even more impressive, with sports betting accounting for 80% of its revenue there. This is all without a land-based presence, which DraftKings only recently went live with in late November, debuting a branded sportsbook at Resorts in Atlantic City.
But the news gets even better for the Boston-based company. Robins also stated in a recent interview that players logging on to bet on sports have also been regaining interest in daily fantasy as well, with many bettors reactivating their DFS accounts.
That piece of information is a bad omen for competitors of DraftKings and FanDuel in the Keystone State, which, altogether, make up only a small fraction of the overall daily fantasy pie, while the two DFS giants rake in the lion share of the profits.
If, as predicted, the pair of daily fantasy market-leaders launch sportsbooks in PA, their lead over the competition will likely grow even wider, with old DFS players rediscovering the game after placing their sports bets. In turn, we could see PA DFS revenue soar to, well … middling heights.
Total DFS domination
DraftKings and FanDuel already dominate the Pennsylvania daily fantasy market by a huge margin. In October, DK posted DFS revenue of $1.54 million, with FanDuel right behind it at $1.25 million. Together, the sites combined for a whopping 96% share of the Keystone State daily fantasy pie.
Revenue at all of the other five state DFS sites totaled a pitiful $107,000.
In New Jersey, FanDuel operates a live and online sportsbook in conjunction with The Meadowlands. In PA, the company is slated to open up shop through a partnership with Valley Forge, which recently requested a sports betting license.
DraftKings’ plans in Pennsylvania are much more nebulous, but, the company will without a doubt find a partner amongst the state’s 12 brick-and-mortar casinos.
Looking at their performance in NJ, there’s no reason to think that DraftKings and FanDuel won’t crush in the PA sports wagering market and continue dominating the field in DFS. Once up and running, and with old players coming back to their DFS accounts, revenue for daily fantasy competitors in the state will likely dry up even further.
How much could DraftKings make in PA?
The quote in which Robins revealed that sports betting was already providing 80% of the company’s revenue in NJ can give us a clue into how much the operator could make when it launches in PA.
Over the past six months of recorded DFS revenue data there, DraftKings averaged roughly $800k. Applying the 80%, that works out to $3.2 million in sports betting revenue and $4 million in total revenue per month.
Feels conservative. And that’s because this estimate doesn’t take into account Robins’ other statement, that sports betting is growing the DFS industry. Given that insight, both DraftKings’ DFS and sports wagering take stand to be significantly higher.
How much, we don’t know, but in the past two months, DK has averaged $6.8 million in sports revenue in NJ, and presumably about one fourth of that figure ($1.7 million) from DFS. Compare that to the roughly $1.35 million DraftKings DFS has averaged in the much larger state of Pennsylvania over the same time frame, and it’s pretty clear that there’s truth to Robins’ words: Sports betting is growing DFS in New Jersey.
Conservatively, lets say that DraftKings’ DFS revenue during prime-time months winds up right around $2 million. Using the 80/20 model, sports betting would take in an average of $8 million a month for the operator. But even that feels conservative due to the fact that the PA market will be less competitive than NJ, due to the market supporting fewer operators.
Also, we believe that DraftKings could make even more than 80% from sports betting in any state in which it operates, because recent numbers don’t account for land-based revenue. Not to mention, the sports betting market is far from mature, and there are still plenty of potential customers who have no idea the industry is even legal.
FanDuel has made $9.9 million from its land-based book, in comparison to $5.2 million from online, although online has only been active two months.
FanDuel itself will be a major player in PA as well, and give DraftKings a good run for its money. In the Keystone State, FanDuel is right behind its archrival, taking in $4.2 million to DraftKings’ $4.8 million over the past six months, giving it a 47% share between the two.
It’s likely that these percentages will stay similar when the pair launches their sports betting apps.
Either way, FanDuel and DraftKings will probably dominate the mobile PA sports wagering market, and at the same time steal even more of the little market share their DFS competitors hold.