DraftKings Beats Expectations, Q1 Revenue Hits $1.175B

DraftKings reported a 53% revenue increase to $1.175 billion in Q1 2024, surpassing expectations and raising its full-year revenue guidance to a midpoint of $4.9 billion. Despite a cash loss of $41 million from operations, the company's adjusted EPS of $0.03 beat expectations of a $0.28 loss per share. DraftKings' stock rose by 2% in after-hours trading following the announcement.

A company press released noted that the increase in DraftKings first quarter 2024 revenue was driven primarily by continued healthy customer engagement, efficient acquisition of new customers, the expansion of the Company’s Sportsbook product offering into new jurisdictions, higher structural sportsbook hold percentage, and improved promotional reinvestment for Sportsbook and iGaming.

“DraftKings’ performance in the first quarter of 2024 was outstanding, reflecting healthy revenue growth and a scaled fixed cost structure that positions us to drive rapidly improving Adjusted EBITDA,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder. “We successfully launched our online sportsbook in Vermont and North Carolina with highly efficient customer acquisition. Looking ahead, we remain committed to maximizing shareholder value through continued innovation, operational excellence and disciplined capital allocation.”

“We are raising the midpoint of our fiscal year 2024 revenue guidance to $4.9 billion from $4.775 billion and the midpoint of our Adjusted EBITDA guidance to $500 million from $460 million as a result of our excellent first quarter results and improved outlook on customer acquisition and engagement for the rest of 2024,” said Alan Ellingson, DraftKings’ Chief Financial Officer. “We expect Adjusted EBITDA Flow-through Percentage to exceed 50% for fiscal year 2024 as we expand our gross margin and exert discipline on our cost structure, while simultaneously investing in promotions and marketing in accordance with our LTV to CAC targets.”

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Dave & Busters Allowing Arcade Gambling Raises ‘Significant Concerns'

With Tuesday's news about Dave & Buster's looking to enter the gambling sector by allowing wagers on its popular in-house arcade games, you'd be hard pressed to find any story about last week's raids of illegal "fish arcades" throughout North Carolina.

Only on Gambling911.com did this come to light. Dave & Buster's seems to offer a game quite similar to those targeted by NC authorities.

Charlotte-Mecklenburg Police filed some 800 plus charges in connection to illegal "fish arcades", arresting two individuals while around a half dozen others were being sought.

The object of these arcades is to feed money into the machine to buy "bullets" then shoot the fish as they swim across the screen.  The bigger the fish, the more money you win.  More expensive bullets purchased, the higher the payouts as well.

It didn't take long for one anti-gambling organization to sound the alarm bells, expressing concern over youth exposure to gambling.  It wasn't exactly lost on us that Dave & Busters is more or less a step up from Chuck E. Cheese outlets.

“Unlicensed and unregulated gambling is associated with increased gambling problems in adults and youth,” Keith Whyte, executive director of the National Council on Problem Gambling, told MarketWatch. “We call on state gambling regulators to examine the legal justifications and gambling-addiction risks of ‘social’ gambling, especially in settings that cater to youth and families.”

Because Dave & Busters offers booze, company policy stipulates: “Persons under the age of 18 or 21 (varies by location) may only enter the premises with a guardian who is at least 25 years of age.”  Some establishments even require those under the age of 21 to leave by 11 pm on Fridays and Saturdays.

D&B, however, is a popular location for kids’ birthday parties.  And because these arcade games are mostly popular with younger people, Whyte might be right.