- What is DraftKings, and how does DraftKings work?
- How does DraftKings make money?
- Daily Fantasy Sports, Sportsbook, and iGaming Apps
- Business-to-business (B2B) Revenue
- Accessories and Apparel
- Advertising and Sponsorship
- DraftKings’ Subsidiaries, Acquisitions, and Exits
- DraftKings’ profit and revenue
- What is the DraftKings business and revenue model?
- DraftKings’ funding and market cap
How does DraftKings make money? Here is a full, in-depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the DraftKings business model, their profit and revenue, and how DraftKings works.
What is DraftKings, and how does DraftKings work?
DraftKings is an online betting app for fantasy sports, live games, and casino play.
How DraftKings works is: Once a user downloads the app, signs up, verifies their information and location (a user must be in one of the 43 states in the US where online sports betting is legal) – they can then link a bank account, add cash, and start betting on DraftKings’ apps – Daily Fantasy Sports, Sportsbook, and iGaming.
Founded in 2012 by Jason Robins, Matthew Kalish, and Paul Liberman, DraftKings is now one of the largest fantasy sports service in the country with more than 1.542 million Average Monthly Unique Payers (“MUPs”) and a market cap of $19.76 billion as of July 2021.
Some of DraftKings’ competitors include FanDuel, BetMGM, Barstool Sportsbook, and other sports betting apps.
How does DraftKings make money?
According to page 25 of DraftKings’ Q1 2021 Form 10-Q, there are 1.542 million Average Monthly Unique Payers (“MUPs”) on their online sports and casino betting apps. So how does DraftKings make money off of all those paying users?
Below is a breakdown of how much money DraftKings makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 4 ways of how DraftKings makes money (in 2021):
DraftKings has a revenue model that makes money in four (4) ways – through their apps (Daily Fantasy Sports, Sportsbook, and iGaming), business-to-business (B2B) revenue, selling accessories/apparel, advertising, and sponsorships.
#1. Daily Fantasy Sports, Sportsbook, and iGaming Apps
DraftKings has three (3) apps: Daily Fantasy Sports, Sportsbook, and iGaming. Combined, they brought in roughly $589.9 million or 96% of DraftKings’ total revenue of $614.5 million in 2020.
How DraftKings makes money on each offering, according to page 5 of DraftKings 2020 Form-10-K, is:
Daily Fantasy Sports revenue comes from “the difference between the entry fees collected and the
amounts paid out to users as prizes and customer incentives in a period.”
Sportsbook revenue is produced “by setting odds that are intended to provide a built-in theoretical margin in each proposition offered to our users.”
iGaming revenue is generated “through hold, or gross winnings, as users play against the house.”
Note: 96% of DraftKings’ total revenue came from Daily Fantasy Sports, Sportsbook, and iGaming in 2020.
#2. Business-to-business (B2B) Revenue
On the business-to-business (B2B) side of things, DraftKings makes money by providing sports betting and integration to iGaming content directly to gaming operators, resellers, and government-run lotteries.
In return, DraftKings receives a revenue share of operating income.
Note: B2B customers also sign into a three (3) to five (5) year contract with DraftKings.
#3. Accessories and Apparel
DraftKings also has an online shop where individuals can purchase branded DraftKings merchandise like hats, hoodies, sweat pants, poker sets, and more. To date, there are more than 50 items for sale in the shop.
- Accessories: $12 to $400
- Apparel: $30 to $125
#4. Advertising and Sponsorship
DraftKings also sells ad space to advertisers and partners with sponsors. Each advertising package has a different pricing model, while sponsorships typically have a fixed fee.
Some of DraftKings’ multi-year deals and partnerships include the likes of the NFL, PGA Tour, MLB, FOX, and ESPN.
DraftKings’ Subsidiaries, Acquisitions, and Exits
To date, DraftKings Inc. has made a total of 7 acquisitions and 2 investments.
DraftKings’ profit and revenue
In 2020, DraftKings reported $614.5 million in revenue.
Note: Because DraftKings Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of DraftKings’ publicly released financial reports, including annual reports, through DraftKings’ investor section on their website.
What is the DraftKings business and revenue model?
DraftKings makes money through a few revenue models that they combine within their company, they are:
- Revenue sharing business model
- Advertising based business model
- Licensing business model
- B2B2C (partnerships) business model
- Business-to-business (B2B) business model
- Transaction based business model
DraftKings’ funding and market cap
According to DraftKings’ Crunchbase profile, DraftKings raised $719.4 million over 12 rounds with a market cap of $19.76 billion as of July 2021.