DraftKings Co-Founder and CEO Jason Robins said the company holds 30% of the US online casino market share because of its products. So he’s “bullish” on DraftKings’ iGaming future. Plus, companywide product innovation will lead DraftKings’ overall growth in 2024.
During today’s Q3 2023 earnings call, Robins said DraftKings Casino and Golden Nugget Online Casino combine for that No. 1 market share. DraftKings (DraftKings 38,30 -1,16%) owns Golden Nugget, which launched in Pennsylvania in August.
An analyst cautiously asked Robins if DraftKings took market share from BetMGM during the last quarter because that company was dealing with a cyberattack. BetMGM has 26% of the US online casino gambling market share, Entain announced yesterday. Entain (Entain PLC 802,80 +0,32%) and MGM Resorts International (MGM Resorts International 39,43 -0,76%) jointly own BetMGM.
Robins matter-of-factly answered that multi-part question about how DraftKings’ iGaming market share grew, as posed by Brandt Montour, director of equity research about gaming, lodging, and leisure for Barclays Corporate and Investment Bank.
Robins said today:
Robins explained why he’s optimistic about online casino gambling:
It’s just such a strong business. Steady growth.
How DraftKings Became No. 1 in iGaming
Robins said his company is adding iGaming bettors by cross-selling to sportsbook wagerers.
Also, Robins said in response to Montour today:
We got a little bit of boost [when] we launched Golden Nugget in Pennsylvania. That was the first state that Golden Nugget is actually on the DraftKings platform. So very excited about that.
We saw some really strong early results there and continue to feel really positive on the trajectory there.
And then we do expect to see more benefit from continuing to migrate Golden Nugget in other states. Pennsylvania was a new launch. We actually haven’t migrated any states yet.
That’s all on the docket over the next couple of quarters, we’re going to migrate … every state for Golden Nugget Online Gaming. So really, I think that’s something that also contributed to a little bit of the share increase. And hopefully, there’s some more juice in that as we migrate these other states and continue to optimize the iGaming.
More US Online Casino States May Take Years to Arrive
Robins said today:
I do think you’ll start to see more momentum in the states in the coming years.
When those states legalize online casino gambling, DraftKings is ready with its extensive customer database, he said.
We don’t have to reacquire a lot of the customers because such a large percentage of our share does come from cross-sell.
However, for now, Robins believes DraftKings’ iGaming growth will arrive through gamblers preferring what he called better products rather than more states legalizing online casino gambling. Plus, he’ll provide details about more products soon.
Robins repeatedly said today that he’d have more answers for analysts at the Nov. 14 DraftKings 2023 Virtual Investor Day.
So, for now, DraftKings Casino will grow through product additions and innovations in the states where it has already launched.
Those states are:
- New Jersey
- West Virginia
The app is absent from these iGaming states:
- Nevada (online poker only)
- Rhode Island (launching next year with Bally Casino)
Analysts Should Ask About iGaming
Robins was happy when he got the first question about iGaming from Robert Fishman, a senior research analyst with MoffettNathanson LLC.
iGaming is probably the one piece of our business I point to that’s under talked about. Mainly because we’re only in 11% of the population now — 87% is still not legalized.
Huge opportunity there.
Online casino gambling has twice the total addressable market (TAM) “on a per capita basis” as online sports betting. So it’s a “tremendous opportunity,” Robins said.
Later, Robins added:
It’s just a really special time right now in the evolution of the market to be at — where there’s so much great opportunity and so much innovation. And I think this is a great example of just this long product roadmap we have of things that we know and have confidence will deliver value.
It’s just a matter of time before we can get to it all.
Online Casino Gamblers Are Reliable
While Robins may have misunderstood the question from Robin Farley, a UBS managing director and leisure analyst, he did provide a historical analysis of the difference between online sports bettors and online casino gamblers from DraftKings’ perspective.
Farley asked if Robins had noticed anything different about the behavior of OSBs and iGaming bettors during the past few months.
The key difference between the iGaming and OSB customer is really the OSB customer is very seasonal and event-driven. There are certainly people that bet on sports throughout the year, but the fact of the matter is that the sport calendar changes throughout the year.
So you’re just going to have more betting in times of heavy sport like right now vs. dead of summer or something like that.
iGaming is kind of there and is the same all the time. So while certainly we have overall activity differences, because more customers on the platform for sport mean more cross-sell into iGaming, on the individual customer basis their behavior isn’t going to change a whole lot throughout the year. There’s some seasonality to it. People tend to, during holiday times have more down time and things like that.
But it’s much less pronounced than the OSB customer, much more steady throughout the year.