Sports betting operator DraftKings lost nearly $348m in the third quarter as the cutthroat US customer acquisition frenzy more than tripled its sales and marketing costs.
Figures released Friday show DraftKings generated revenue of $132.8m in the three months ending September 30, nearly twice the sum it earned in the same period last year, although revenue was up a more modest 42% if you assume the company’s acquisition of the SBTech wagering tech platform was a done deal at this time last year.
Despite the revenue surge, DraftKings reported a net loss of $347.7m in Q3, as sales & marketing costs more than tripled year-on-year to $203.3m as the company expanded into additional US betting states and fought furiously with rivals to sign up customers in time for the launch of a new NFL season.
DraftKings boasted just over 1m average monthly unique payers in Q3, which includes not just sports bettors but also daily fantasy sports and online casino customers. That represented a 64% rise from Q3 2019’s average.
However, average revenue from these 1m customers dipped $2 to $34, which the company blamed on customer-friendly NFL results and the paucity of major sports on July’s calendar due to COVID-19.
Regardless, DraftKings boosted its fiscal 2020 revenue guidance from a range of $500m-$540m to $540m-$560m, while 2021 is now forecast to generate $750m-$850m, assuming that “all professional and college sports calendars that have been announced come to fruition.” So, you know, a sure thing in this pandemic age.
Following its recent launch in Tennessee, DraftKings is now offering sports betting in 10 states representing around 20% of the US population. DraftKings expects to boost this to 26% if it can convince regulators in Michigan and Virginia that it’s worth of licensing.
DraftKings also expressed interest in pursuing a license in Canada’s largest province Ontario, which recently confirmed steps to open up its monopoly online gambling market to private operators. However, the federal government still has yet to authorize single-event sports betting.
DraftKings investors reacted – how else? – by pushing the company’s share price up 10% in early Friday trading, although the exuberance has grown a little less irrational as the day progressed, settling for a 4% rise by midday.