DraftKings raised its outlook early Tuesday as the betting giant's growth outpaces already high expectations. DKNG stock is extended above a buy zone.
In an investor presentation Tuesday, DraftKings noted that betting participation in multiple states is larger and growing faster than previously anticipated. The company expects the online sports betting (OSB) and iGaming total addressable market to leap from $20 billion in 2023 to around $30 billion in 2028 in states where DraftKings currently operates.
DraftKings included its current operations in 25 states as well as Ontario, Canada and Puerto Rico for the forecast. But the company noted that sports gambling legalization is likely to expand to new states and areas.
DraftKings expects 68% revenue growth to $3.7 billion for 2023, improving to $4.7 billion in 2024. The Boston-based sportsbook on Tuesday guided revenue to $6.2 billion by 2026, jumping to $7.1 billion by 2028 based on existing states alone.
The company expects to report adjusted earnings before interest, tax, depreciation and amortization of $400 million in 2024. DraftKings guided 2026 adjusted EBITDA to $1.4 billion and 2028 adjusted EBITDA to $2.1 billion.
The company expects an online sports betting hold rate of 9.5% this year. The OSB hold rate refers to the percentage of money that sportsbooks keep for every dollar wagered.
OSB gross gaming revenue climbed to a 37% market share as of September while iGaming gross gaming revenue claimed a 27% share, DraftKings documents show.
DraftKings Launches New Parlay, ESPN Bet Goes Live
DraftKings also announced the launch of new "Progressive Parlay" offerings. Progressive parlays are bets that will still win even if one or more of the legs — individual bets made within the parlay — miss. The company did not disclose a specific date but noted the launch is "coming soon."
Elsewhere, Disney's and Penn Entertainment's ESPN Bet is scheduled to go live Tuesday across 17 states in the U.S. With the launch, ESPN is now using official odds provided by ESPN Bet across its editorial and other content. And ESPN's Daily Wager program was rebranded on Nov. 10 to ESPN Bet Live.
ESPN partnered with Penn Entertainment on a gambling sportsbook in August. Under the deal, Penn rebranded its Barstool Sportsbook as ESPN Bet. Meanwhile, ESPN will use ESPN BET exclusively. Penn will pay ESPN $1.5 billion cash over 10 years, plus $500 million in warrants to buy PENN stock. In return, Penn will have exclusive rights to the ESPN Bet trademark in the U.S. for the next decade.
DKNG Stock
DKNG stock surged 4% Tuesday, adding to its 1.5% gain from Monday. The gain put DraftKings just past a buy zone for a consolidation after climbing above the 34.49 buy point on Nov. 6.
DKNG stock rallied more than 225% so far this year.
Meanwhile, Cathie Wood and ARK Invest appear to be taking more profits on DraftKings stock after unloading nearly $35 million worth of shares on Friday and Monday.
PENN stock rallied 4.8% Tuesday with the launch of ESPN Bet. Disney stock climbed 1.8% to test its 200-day line.
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