DraftKings ‘Have a Ton of Growth in the U.S.’ and ‘Don’t Need’ International M&A

A Solid Start, Marred by March

The company reported $1.409 billion in revenue, up 20% year-over-year, and $103 million in adjusted EBITDA, per CFO Alan Ellingson.

Yet, an unprecedented 82% win rate for higher seeds in the NCAA Tournament cost DraftKings $170 million in revenue and $111 million in EBITDA, per Ellingson’s estimates.

“If not for customer-friendly sport outcomes in March, we will be raising our fiscal year 2025 revenue and adjusted EBITDA guidance,” Robins noted.

Despite the hit, Robins remained confident, saying, “I’m 100% confident that these are random outcomes,” expecting normalization.

The company lowered its 2025 revenue guidance to $6.2–6.4 billion and EBITDA to $800–900 million. “Our core value drivers are outperforming our expectations,” Ellingson added, pointing to a 16% rise in sportsbook handle to $13.9 billion.

Live Betting Steals the Show

Live betting emerged as a major growth driver, surpassing 50% of total handle for the first time. “The big part of the story here has been live betting. Live betting is up significantly for us year over year,” Robins said.

Acquisitions like SimpleBet, SportsIQ, and Mustard Golf fueled this surge, with Robins noting, “This past quarter was the first time I felt like, wow, I’m seeing impact on the live side start to materialize.”

April’s MLB live handle jumped 36% year-over-year, and Robins sees more upside, citing mature markets where live betting hits 70–80% of gross gaming revenue.

“We think there’s a ton of opportunity there, but really happy to see that,” he said. A structural sportsbook hold of 10.4%, up 60 basis points, and efficient promotions further boosted margins, per Ellingson.

These gains helped DraftKings gain basketball market share, Robins confirmed, despite competitors’ softness.

AI Sparks a Company-Wide Shift

Artificial intelligence is transforming DraftKings’ operations, moving from niche use to a core strategy. “AI has gone from something where pockets of the company were utilizing it to becoming a company-wide movement,” Robins enthused.

He highlighted a cultural shift: “People are totally shifting that mindset to what could I do with AI. It’s just an amazing thing.” Employees now prioritize AI solutions over headcount, driving efficiency in marketing, product development, and customer engagement. “

It’s just really a remarkable thing to see how much people have really started to understand how this can be life-changing and business-changing,” Robins added.

This focus aligns with DraftKings’ cost discipline, with Ellingson noting, “Adjusted operating expenses slightly outperformed our expectations.” AI’s role in optimizing promotions and analytics helped maintain a healthy balance sheet, with $1.1 billion in cash after repurchasing 3.7 million shares.

DraftKings Plus Shines in New York

A limited test of DraftKings Plus, a subscription service, in New York showed promising results. “We had a very limited launch because we weren’t sure if we were going to make changes to the product,” Robins explained.

Despite the small user base, “It’s been really a success amongst those customers.” High satisfaction ratings, low cancellation rates, and value for both users and DraftKings sparked optimism.

“People are not canceling the subscription, and they’re seeing value in it, and it’s also generating value for us,” Robins said. He expressed cautious optimism for a broader rollout but stressed, “We don’t want to roll it out more broadly until we’ve done quite a bit of testing.”

Prediction Markets Stir Interest

Robins addressed the potential of prediction markets, particularly for non-sports events like elections, amid growing regulatory discussions.

“It’s definitely something that they’re talking about, and it’s early days,” he said, noting that state regulators and tribes are starting conversations. He sees prediction markets as inevitable, stating, “As it continues to grow, that’s just going to continue to be a powerful lever that this is happening, kind of whether you want to or not.”

Robins suggested states could benefit by regulating these markets, asking, “Do you want to do it in a way that makes sense if you’re a California tribe or if you’re a state that hasn’t legalized it yet?”

While DraftKings withdrew an application to enter this space, Robins remains open to future opportunities.

M&A and Capital Allocation Stay Strategic

DraftKings views mergers and acquisitions as one tool among many to create shareholder value. “M&A, like anything, is just part of an overall evaluation of what’s the best way to create value for our shareholders,” Robins said.

He cited last year’s acquisitions: SimpleBet, SportsIQ, and Mustard Golf, as successes, noting, “We’re now seeing pay dividends in our increase in live handle as well as the cost reductions.”

These deals paid for themselves through cost savings alone, per Robins. On global M&A, he clarified, “We don’t need it, but we do believe that if the right opportunity emerges, it’s something that fits well.”

The U.S. remains the focus, with “global ambitions one day,” but a high bar for international moves. For capital allocation, DraftKings repurchased $140 million in shares in Q1, part of a $1 billion buyback plan. “We did repurchase, what was it, 140,000,000 shares in Q1,” Robins confirmed.

Jackpocket’s Texas Exit Bites

The shutdown of Jackpocket’s digital lottery operations in Texas and New Mexico created a $30 million revenue and $26 million EBITDA headwind, per Ellingson.

“Maryland increasing its tax rate on sports betting and Jackpocket shutting down digital lottery courier operations in Texas and New Mexico are a combined headwind,” he said.

This impacted Jackpocket’s profitability, with Robins noting, “We do expect that it will probably be about breakeven, maybe slightly up or down from the profitability level, largely due to the Texas exit.”

Despite this, he emphasized Jackpocket’s growth, saying, “It’s still growing very quickly even with Texas.” Robins hinted at ongoing talks to re-enter Texas but noted, “It’s early days,” with no immediate legal push.

Looking Ahead with Confidence

Despite the March Madness setback, DraftKings’ leadership remains bullish. “We are really optimistic about the rest of 2025 and are well-positioned for continued success in the future,” Robins said.

Strong customer metrics, efficient acquisitions, and innovations like live betting and AI fuel this confidence. With a $6.3 billion U.S. betting market, DraftKings aims to capitalize on its 49% population coverage across 25 states.

Can DraftKings sustain its momentum, or will sports outcomes keep testing its resilience? The year’s young, and Robins is betting big.