DraftKings has upped its long-term earnings before interest, tax, depreciation and amortisation (EBITDA) guidance from $1bn to $1.7bn, following strong igaming results in 2020.
The operator did not provide a date at which it expected to reach this level of earnings. Instead it said this was based on 65% of the US having access to legal online betting in their home state, 30% having access to legal igaming and 64% of Canada having legal betting and igaming.
The operator expects to hit this target after five years of maturity at these levels of legalisation.
The operator then assumed at least a 20% market share for US online sports betting for $2.9bn in betting revenue, based on a market that it said would be worth $22bn if sports betting was legal nationwide.
On top of this, it expects $1.8bn through at least a 15% market share in US igaming, in a market worth $40bn at full legalisation. This figure was upped from 10% in previous projections. DraftKings chief executive Jason Robins said this figure was lower than its existing share in most markets.
“We don’t necessarily thing this decline in market share is going to happen, but we wanted to be conservative and it really shows that there is a very strong outlook for this business,” Robins said.
It then expects $300m from Canada on a 10% market share.
An additional $200m in revenue will come from other sources.
DraftKings then said it anticipates costs of sales of $2.4bn for gross profit of $3.0bn.
It then expects marketing costs of $500m. The operator spent $495.2m on marketing in 2020. This will leave a contribution profit of $2.5m, compared to a $227.2m loss in 2020.
After selling, general and administrative costs of $1.1bn and cost savings of $200m through synergies, this leaves earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.7bn. In 2020, DraftKings made an EBITDA loss of $391.9m.
DraftKings also said its migration to SBTech’s platform was currently in the beta stage and was still expected to complete by the end of Q3.
Robins added that in the long term there were ambitions to bring DraftKings into more new markets outside of North America, but that this was not yet a primary focus.
“We definitely have ambitions to be a global company,” he said. “Right now our primary focus is on the US but global expansion is definitely a part of our future.”