DraftKings pumped up its sportsbook’s parlay offerings during its Q2 earnings call on August 5.
“I really love how we are merchandising our same game parlays, which I think have great personality,” said CEO Jason Robbins.
DraftKings adds to its parlay offerings
When you log into the DraftKings sportsbook app in Pennsylvania, a carousel of prepackaged single game parlays appear.
A pre-made parlay for the Mets vs. Yankees game on Aug. 5 is headlined “Empire State of Mind” and is labeled as a “quick same game parlay.”
During Q2, DraftKings added same game parlays for UFC fights. The sportsbook also beefed up its parlay offering during the MLB season ahead of NFL by adding:
- Parlay insurance
- Prepackaged parlays
- Ability to void an individual leg of a parlay
DraftKings plans to launch a feature that allows multiple same game parlays to be combined into one.
FanDuel Sportsbook rolled this out to users in Dec. 2021. With same game parlay plus (SGP+) at FanDuel you can combine multiple same game parlays into one whole parlay.
Growth of parlays at DraftKings
Robins said that DraftKings had about a 1,7000 basis point YoY increase in percentage of bets made as a parlay.
“That’s a pretty big gain. We’re obviously not done. I think we can hopefully see it continue to go up. Right now, I think a good ceiling….minimum ceiling, You can see in the reports from some of the states. But we continue to close that gap and I think that they’re continuing to increase, too. It feels like there’s a pretty high ceiling there. It’s not even just parlay mix. It’s number of legs. Every leg of a parlay is like its own bet.
“The percentage that you would take would be taken off of each leg. So the more legs you can get, obviously, more parlays. But more legs you can get on parlays is also another really good thing and it can increase hold quite a bit.”
DraftKings Sportsbook operates in Pennsylvania through a partnership with Hollywood Casino at the Meadows. DraftKings ranks a distant second in the state to FanDuel Sportsbook for handle and revenue. The Pennsylvania Gaming Control Board does not break down monthly figures by bet type (straight bet, parlay). However, New Jersey does. In June, parlays accounted for $38 million, over half of the NJ sportsbooks’ revenue.
Parlays with personality
DraftKings is focusing on “marketing and merchandising” parlays on the app better. They are tapping to their DFS roots and their database.
Commented Robins:
“For us, it’s about having it feel native, not feel like we’re pushing something on the customer. We use fun names that are in line with the sorts of things that we would name our daily fantasy contest that sports fans, we think, would find enjoyable and, at times, humorous, and just try to give them some personality.
“It’s all database. So we test things to see what works. We’re working on updating our data science engine so that those things become fully personalized. They’re not yet, but we’re working on that.”
Key figures for DraftKings in Q2 2022
- Revenues of $466 million, an increase of 57% year-over-year;
- $407.6 million in adjusted EBITDA losses
- DraftKings is raising its fiscal year 2022 revenue guidance to a range of $2.08 billion to $2.18 billion from the range of $2.055 billion to $2.175 billion previously announced on the company’s first quarter earnings call on May 6, 2022, which included contributions from the Company’s acquisition of GNOG and the Company’s expected launch in Ontario. This updated 2022 revenue guidance range equates to year-over-year growth of 60% to 68%.
- DraftKings is also improving its fiscal year 2022 Adjusted EBITDA guidance to a loss of between $765 million and $835 million from its Prior FY 2022 Guidance of a loss of between $810 million and $910 million.
Shares of DraftKings ($DKNG) increased 9.4%, hitting a four month high in premarket trading on Aug. 5 after the company reported a narrower-than-expected loss, revenue that rose above forecasts and lifted its full-year outlook. DraftKings sees “no perceivable impact” from broader macroeconomic pressures.
DraftKings Q3 revenue volatility
CFO Jason Park made some reference points regarding the potential revenue volatility for Q3.
- DraftKings expects approximately $1 billion of online sportsbook handle on NFL games in Q3.
- Last NFL season, the average of $DKNG bottom 3 NFL hold weeks was approximately negative 10%.
- As a rule of thumb, you can look at the five widest moneyline spreads for each week of the NFL season. If the underdog loses in each of those games, DraftKings expects to have a negative hold in that week. If the underdog wins in one or two of those five games, they would expect to have close to normal hold. And if the underdog wins in three, four, or five of the games, they would expect to have better than expected hold. This rule of thumb is simplistic considering that specific spreads, over unders, parlays and relative game exposures impacted, too, but it should give a general sense of how revenue for the quarter is trending for the online sportsbook
