DraftKings Raises Adjusted Long-Term EBITDA to $2.1 Billion

DraftKings announced an increase in their adjusted EBITDA projection for 2021. The projection rose by 23.5% from $1.7bn to $2.1bn. Despite experiencing a net loss of $1.52bn, DraftKings saw significant revenue growth of 110.3% to $1.30bn. The CEO of DraftKings, Jason Robins, attributed this increase in adjusted EBITDA to the company’s confidence in its various operations, such as online services business (OSB) and igaming. DraftKings also raised their total addressable market (TAM) estimate in North America from $67bn to $80bn, a rise of 19.4%. It is important to note that the adjusted EBITDA estimate does not include any long-term costs associated with predicted Golden Nugget Online Gaming (GNOG) synergies or any potential upsides from new initiatives such as marketplace and media. The acquisition of GNOG, worth $1.56bn, was announced by DraftKings in August 2021. Robins emphasized that the increased EBITDA is based on the legalisation rates of sports betting and igaming in the US and Canada. DraftKings has set a multi-year plan to achieve 30+% EBITDA margins, with a vision of reaching $2.1bn of EBITDA once certain legalisation rate targets are met. The investor presentation highlighted a net revenue figure of $6.7bn, which DraftKings expects to attain upon reaching these legalisation rates. Online sportsbook revenue is projected to account for $3.3bn, igaming for $2.5bn, digital financial services and Canada revenue for $400m each, and other revenue forms for $100m. DraftKings anticipates a rise in contribution-positive states in FY 2022, with the expectation of five more states becoming contribution profit positive. This would bring the total to ten states representing 18.7% of the population, leaving the remaining 17.4% in the investment phase in 2022. In other news, DraftKings has agreed to pay a civil penalty of $150,000 for violating proxy betting rules in New Jersey.