DraftKings Anticipates Additional $20M 2023 Revenue From Kentucky

Written By Steve Schult on August 4, 2023
DraftKings $20M Kentucky launch

With its upcoming launch into the Kentucky market, DraftKings is adding eight figures of revenue to its 2023 projections.

During its second-quarter earnings call Friday, DraftKings CFO Jason Park said the company anticipates an extra $20 million of revenue thanks to the DraftKings Kentucky platform.

“We are very excited that Kentucky’s horse racing commission recently set a target launch date of Sept. 28, 2023 for online sports betting,” Park saod. “Which is sooner than we previously anticipated. As a result, we expect $20 million of additional revenue in 2023 and a headwind of $30 million to 2023 adjusted EBITDA.”

DraftKings looks to Kentucky to build on strong year

The call started with CEO Jason Robins announcing massive year-over-year growth for the Boston-based gaming giant.

During the second quarter, DraftKings generated $875 million in revenue. Those figures represent an 88% jump from the second quarter of 2022. Robins also added the company saw online market share at levels not seen in three years.

“In the states where we are currently live, we achieved (online sports betting) handle share of 35% and (online sports betting) gross gaming revenue share of 32% in the quarter,” Robins said.

The last time the market share was this high was in the second quarter of 2020. The company expects its entry into the Kentucky sports betting market to only help its performance numbers.

“We expect contribution profit, which we define as adjusted gross profit less external marketing, to grow to approximately $700 million in 2023,” Park said. “Which includes our investment into Kentucky.”

Park also noted the company’s adjusted gross profit margin was slightly increased. It went from 42%-45% to a tighter range of 43%-45%.

On the other hand, pre-launch spend and other costs associated with Kentucky sportsbook promotions could’ve had the opposite effect on DraftKings’ earnings if the launch was later.

“The bridge from our May full year 2023 guidance to our current May full year 2023 guidance includes increases due to stronger customer retention, acquisition and engagement, structural sportsbook hold improvement and favorable sport outcomes in the second quarter,” Robins said. “These items are partially offset by Kentucky launching this year and being included in our forecast.”

Some of these figures were released Thursday in a press release, where DraftKings confirmed its Kentucky launch.

Still no word on sports betting partner

Despite the optimism surrounding Kentucky, the one detail left out of the call was which venue DraftKings will partner with.

According to the state’s sports betting legislation, any online operator must partner with one of the state’s nine horse racing associations. However, neither Robins nor Park released any information about a possible partner.

Aside from DraftKings, Caesars Sportsbook, BetMGM and FanDuel are the only other operators that have confirmed a Kentucky product. However, only Caesars and FanDuel have revealed partnerships.

Caesars gained market access through a deal with Keeneland and Red Mile, while FanDuel partnered with Churchill Downs.

Churchill Downs Inc. will have multiple partners and owns eight of the 14 venues eligible for retail sportsbooks. As a result, CDI seems like the most likely partner for DraftKings.

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Steve Schult

The Managing Editor of PlayKentucky, Steve Schult is a veteran of the gambling industry with more than a decade of experience covering the space. After earning his journalism degree from Marist College, the New York native began covering high-stakes poker tournaments and the U.S. gambling industry for various outlets. Following stints as a writer for Card Player Media, Bluff Magazine and the World Series of Poker, Schult joined Catena Media and has managed coverage for a handful of states.

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