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DraftKings hit several milestones in the second quarter of 2024, although it touted some more than others. The point the company emphasized the most is that for the first time, its board of directors has authorized a share buyback.
DraftKings also reported net income for a quarter for the first time since going public and hit a new revenue high. The overall message was one of optimism for the company.
DraftKings shows a positive bottom line
While DraftKings showed an operating loss of almost $32.4 million for the second quarter of 2024, net income was positive for a quarter for the first time since DraftKings went public in the second quarter of 2020. That figure was over $63.8 million, a drastic improvement from DraftKings’ Q2 2023 earnings when it showed a net loss of nearly $77.3 million.
The company’s operating loss was significantly better than the same quarter in 2023, too, decreasing by about 47%. Total revenues for Q2 2024 surpassed $1.1 billion, also a new high for any single quarter for DraftKings since going public.
In its investor presentation, DraftKings announced a 26% year-over-year revenue bump and the authorization of a $1 billion share buyback. The company advanced its revenue projection for the 2024 calendar year, raising the midpoint to half a billion dollars.
As part of the reasons for optimism, DraftKings credited more efficient and robust customer acquisition.
DraftKings adds to customer base
DraftKings said the number of new customers it added during the second quarter of 2024 was up 80% over the same period in 2023. Furthermore, it says that the cost of acquiring each of those customers declined more than 40% in the same measurement.
The presentation did not break down how much of those improvements were isolated to DraftKings Casino or Golden Nugget online casino. Those totals were independent of Jackpocket, however, as DraftKings’ acquisition of Jackpocket did not close until late May.
When it comes to those casino products, DraftKings shared that it doubled the number of in-house developed games released in the 2023-24 fiscal year and made other improvements. Meanwhile, DraftKings says its combined US online casino and online sports betting market share held steady in Q2 2024.
Perhaps the greatest point of intrigue is a wrinkle that DraftKings intends to test in a few markets when it comes to online sports betting.
DraftKings announces surcharge plan
DraftKings explained that starting Jan. 1, 2025, it will begin deducting what it is calling a “gaming tax surcharge” from online sports betting winnings in four states. Those states will be:
- Illinois
- New York
- Pennsylvania
- Vermont
All four of those states levy privilege tax rates greater than 20% on the sportsbook revenue of licensees like DraftKings. At this time, DraftKings will not deduct any surcharges from online casino winnings in Pennsylvania.
It’s uncertain whether that will be the case should Illinois, New York, or Vermont regulate online casino play with similar tax structures in the future. Given that DraftKings has not announced the surcharge for Pennsylvania online casino winnings despite the fact that slot revenue is taxed at a rate greater than 20% there, it seems probable that this surcharge will continue to apply to sports betting winnings only.
This is simple evidence of how much more lucrative online casino products are for gambling companies compared to sports betting. DraftKings shows nothing but confidence in the entire suite of its products moving forward.
