DraftKings has never reported a profit, but that may change soon.
The sports betting and daily fantasy company reported fourth-quarter revenue of $322 million, up 146% from the same period last year. DraftKings now reaches an average of 1.5 million unique paying users each month.
The growth did not come cheap. The Boston-based company more than tripled its sales and marketing budget from the previous year, up to $192 million, and had similar growth in its technology and operational expenses.
- Sponsorship deals with ESPN and the New York Giants came to fruition at the end of Q3 2020.
- In Q4, the company landed deals with UNLV, the Detroit Pistons, Philadelphia Eagles, and Nashville Predators.
- DraftKings entered a multiyear deal with Turner Sports and Bleacher Report in October.
There’s reason to believe the investment will pay off. Based on an assumption that March Madness and other major sports events will happen as planned, DraftKings upped its revenue forecast for 2021 to $1 billion from $900 million.
Twenty-five states have legalized sports betting, and 20 of those have commenced operations. DraftKings’ revenue report does not include anything from 2021, when Michigan and Virginia opened up for sportsbooks. DraftKings is now active in both states.
JPMorgan predicts that the U.S. sports betting market will grow sixfold to $9.2 billion by 2025.