How DraftKings Makes its Money: Revenue Breakdown

Key Takeaways

• DraftKings generated $4.77 billion in FY2024 revenue — up +30.3% year-over-year — driven by online sports betting ($2.90B, +31%) and rapid iGaming/online casino growth ($1.39B, +48%)
• Revenue comes from bettors losing wagers (sports betting hold rate: ~8–10% of handle) and the casino house edge (iGaming: 2–5% mathematical advantage per game)
• Monthly Unique Players: 3.8M (+23%) — still growing as new state launches and product improvements attract and retain customers
• Net loss narrowed to -$0.31B (from -$0.91B in FY2023); operating margin: -3.1% — approaching GAAP breakeven, with FY2025 profitability guided
• Gross margin: 43.4% — constrained by state gaming taxes (ranging from 10%–51% of GGR) and promotional bonusing costs; will improve as promotional discipline continues
• iGaming is the higher-margin, faster-growing segment (+48% in FY2024 vs. +31% for sportsbook) — legal in only 6 states, representing massive upside if more states legalize
• DraftKings + FanDuel (Flutter) control ~65–70% of the U.S. online sports betting market — a durable duopoly position built from their daily fantasy sports brand heritage
• The same-game parlay (SGP) mix shift is the primary driver of hold rate improvement — higher-margin bet types increase revenue per dollar wagered without requiring more customers

How Does DraftKings Make its Money?

DraftKings (ticker: DKNG) is a digital sports entertainment and online gambling company that operates the largest online sportsbook and one of the fastest-growing online casinos in the United States. The company earns money the same way a casino does — not by charging fees, but by being the “house”: DraftKings collects all bets, pays out all winnings, and keeps the difference.

Founded in 2012 as a daily fantasy sports (DFS) platform by Jason Robins, Matt Kalish, and Paul Liberman in Boston, DraftKings rode the wave of sports betting legalization that followed the Supreme Court’s May 2018 ruling in Murphy v. NCAA, which struck down the federal prohibition on state-regulated sports betting. The company went public via a three-way SPAC merger in April 2020, acquiring sports data provider SBTech and blank-check company Diamond Eagle Acquisition Corp simultaneously.

By FY2024, DraftKings was live in 28+ states for sports betting and 6 states for iGaming, generating $4.77 billion in revenue — up +30.3% — and approaching the profitability inflection that has been the central investor thesis since the company went public.

DraftKings (DKNG) Business Model

How the House Makes Money: Hold Rates and House Edge

DraftKings’ economics are fundamentally different from subscription software or advertising businesses. Revenue equals Gross Gaming Revenue (GGR) — the total amount wagered minus the winnings paid out to players. DraftKings does not take a fee; it is the counterparty to every bet.

Sports Betting Hold Rate: The “hold” is the percentage of total wagered money that DraftKings keeps as revenue. If $100 in bets is placed and DraftKings pays out $91 in winnings, the hold is 9%. The theoretical hold rate depends on the odds offered:

• Straight/moneyline bets: ~5–6% hold — the operator’s edge is built into the spread between “buy” and “sell” odds (the “vig” or “juice”)
• Point spread bets: ~5% hold — similar structure, -110 pricing on both sides
• Parlay bets (multiple outcomes combined): 20–30%+ hold — the probability of hitting every leg compounds against the bettor
• Same-Game Parlays (SGP): High and variable hold — complex correlation pricing gives the operator more pricing power

DraftKings’ blended hold rate across all bet types has been improving as customers shift toward higher-margin products (SGPs, parlays, live/in-game betting). FY2024’s hold rate improvement was a key driver of revenue growing faster than underlying betting handle growth.

iGaming House Edge: In online casino games, the house advantage is built into the mathematical design:

• Slots: Typically 3–7% house edge (player return 93–97%)
• Blackjack: ~0.5% house edge with optimal play, but players rarely play optimally (~2% effective)
• Roulette: ~5.26% on American roulette (double zero), ~2.7% on European
• Live dealer games: Higher engagement, slightly lower house edge

Unlike sports betting — where a surprise underdog win can cause a single-day payout spike — casino games have predictable statistical outcomes that make iGaming revenue more stable and forecastable.

The Funnel: Customer Acquisition to Lifetime Value

DraftKings’ business is built on a land-and-retain model:

1. Acquire: A new bettor signs up with a promotional offer — deposit match, free bet, or bonus credits (e.g., “Bet $5, Get $200”). This is extremely expensive: the cost to acquire a new sports bettor was ~$300–500 in the early legalization years, though it has declined significantly as the market matures.

2. Activate: The bettor places their first wager and engages with the product — mobile app, live betting, SGP builder, Responsible Gaming tools.

3. Retain: Ongoing promotions, loyalty programs (Crown Club), personalized odds boosts, and product quality drive repeat wagering. A sports bettor’s “lifetime value” (LTV) is the cumulative GGR they generate over their entire relationship with DraftKings.

4. Expand: DraftKings cross-sells iGaming (casino) to sports bettors, significantly increasing LTV. A customer who uses both products generates roughly 2–3x the revenue of a sports-only customer.

5. Mature: As market states mature (multi-year post-legalization), promotional intensity declines, customer LTV increases, and per-state economics improve toward profitability.

The State Legalization Engine

DraftKings’ growth is directly tied to the sequential legalization of online sports betting across U.S. states. Each new state launch follows a predictable economic arc:

• Launch year: High promotional spending, elevated customer acquisition costs, negative state-level contribution margin. DraftKings absorbs near-term losses to build market share before competitors establish brand awareness.
• Year 2–3: Promotional spending normalizes, market share stabilizes (DraftKings typically lands at #1 or #2 by revenue in new states), and the state begins approaching contribution margin breakeven.
• Year 3+: State is a net positive contributor. Mature states fund the investment in new state launches.

This model means that the company’s aggregate profitability depends on: how many states are simultaneously in “early high-cost” phase vs. “mature profitable” phase. As the legalization wave crests and fewer new states remain to launch, the proportion of revenue from mature, profitable states increases — the primary driver of the path to GAAP profitability.

The iGaming Optionality Lever

iGaming (online casino) is DraftKings’ most valuable long-term optionality. It is currently legal in only 6 states, yet those 6 states generated $1.39 billion in FY2024. If online casino legalizes across the full U.S. (26 states have already legalized land-based casinos that could create political momentum), the iGaming opportunity dwarfs the sports betting opportunity in raw revenue potential. Per-customer iGaming revenue is higher than sports betting (more frequent sessions, higher house edge), and iGaming doesn’t depend on the sports calendar.

DraftKings (DKNG) Competitors

FanDuel / Flutter Entertainment is DraftKings’ closest competitor and the market leader by most measures. Flutter is a London-listed global gambling conglomerate (ticker: FLTR) that owns FanDuel (U.S.), Paddy Power Betfair (UK/Ireland), PokerStars, and Sky Betting & Gaming. FanDuel and DraftKings built their brand recognition through daily fantasy sports (DFS) in the pre-PASPA era; both companies translated those brands and customer databases into sportsbook market share at scale. DraftKings and FanDuel control approximately 65–70% of U.S. online sports betting handle combined — a durable duopoly reinforced by brand trust, product breadth, and data advantages.

BetMGM is the joint venture between MGM Resorts and Entain (UK-listed gambling company). BetMGM is the third-largest U.S. online sportsbook by market share and the largest iGaming operator in New Jersey. MGM’s brand recognition and loyalty program (M life Rewards, with millions of casino hotel loyalty members) give BetMGM a customer acquisition channel that DraftKings lacks. The land-based casino loyalty database is a structural advantage for MGM in acquiring high-value players.

Penn Entertainment operates the ESPN Bet platform under a $2 billion brand license deal with Disney (which owns ESPN). ESPN Bet launched in late 2023 with the promise of ESPN’s sports media distribution and audience reach. Early results have been below expectations — ESPN Bet has struggled to convert the enormous ESPN media audience into high-LTV bettors — but the brand partnership represents a potentially powerful distribution channel if the product improves.

Caesars Sportsbook is operated by Caesars Entertainment, one of the largest land-based casino operators in the U.S. Like MGM, Caesars has the advantage of a large loyalty program (Caesars Rewards, with 60M+ members) and physical casino presence that can funnel players to the online product. Caesars has been the most aggressive with promotional spending to build online market share.

Wynn Resorts operates WynnBET, a smaller but premium-positioned online sportsbook. Wynn targets high-stakes, high-value bettors rather than competing for mass-market casual players.

MGM Resorts (via BetMGM, above) and Live Nation (sports and entertainment event ticketing) represent the broader competitive landscape for discretionary entertainment spending — DraftKings is competing for the same entertainment dollar as live events, streaming, and social gaming.

Revenue Breakdown

All revenue figures represent Gross Gaming Revenue (GGR) net of free-bet costs. DraftKings’ fiscal year ends December 31.

The FY2024 revenue picture: overall growth of +30.3% reflects both continued state-level maturation (same-state revenue growth from existing legal markets) and new state launches. iGaming growing +47.9% vs. sportsbook’s +31.2% reflects the faster pace of customer adoption in online casino — once players try the casino product, session frequency is significantly higher than sports betting (which is inherently tied to the sports schedule). The “Other” segment (primarily Daily Fantasy Sports, which was DraftKings’ original product) has plateaued as real-money sports betting has cannibalized DFS player attention.

MUP growth of +23% combined with ARPMUP growth of ~7% produces approximately +30% revenue growth — consistent with the reported figures. The hold rate improvement (more SGPs, more parlays) is the revenue-per-player expansion story.

Business Segment Deep-Dives

Online Sportsbook ($2.90B, 61% — The Core Business)

The sportsbook is DraftKings’ flagship product and primary revenue driver. It offers wagering across every major U.S. sport (NFL, NBA, MLB, NHL, college football, college basketball) and hundreds of international leagues (soccer, tennis, cricket, golf, MMA/UFC, boxing, motorsport, esports).

Same-Game Parlays (SGP): The single most important product innovation of the post-PASPA era. DraftKings (and FanDuel, which launched the product first) pioneered SGPs — allowing bettors to combine multiple correlated outcomes from the same game into one bet. A bettor can bet that Lamar Jackson throws for 300+ yards AND the Ravens win AND Mark Andrews scores — all in one parlay ticket from the Ravens’ game. The statistical challenge: these outcomes are highly correlated (a QB who throws 300 yards is more likely to win). DraftKings’ SGP pricing algorithm adjusts odds to account for correlation and builds in a margin that results in much higher hold rates than standard parlays.

Live/In-Game Betting: Bets placed while a game is in progress. Live betting now accounts for a significant and growing portion of handle. It drives engagement (bettors who start with a pre-game bet continue wagering throughout the game), but it requires sophisticated real-time odds adjustment infrastructure. DraftKings built its own in-house live pricing technology after years of relying on third-party providers.

Responsible Gambling: An increasingly important product and regulatory dimension. DraftKings offers deposit limits, loss limits, self-exclusion, and cooling-off periods. Regulatory requirements for responsible gambling tools have tightened as concerns about problem gambling grow with the rapid expansion of mobile betting. Failure to implement adequate responsible gambling protections creates regulatory and reputational risk.

iGaming / Online Casino ($1.39B, 29% — High-Growth, High-Margin)

DraftKings Casino is available in New Jersey, Pennsylvania, Michigan, Connecticut, West Virginia, and Delaware — the six states that have legalized online casino gambling. Despite covering only 6 states vs. 28+ for sportsbook, iGaming is already 29% of total revenue and growing faster.

Why iGaming is superior economics to sports betting:

1. Higher hold rate: Slots typically take 4–6% of every dollar wagered. Sports betting takes 8–10% of handle. On a per-dollar-wagered basis, casino is significantly more profitable.

2. No event dependency: Sports betting revenue spikes around NFL season (September–January) and falls in the summer sports doldrums. Casino revenue is smooth year-round — slots don’t care if it’s the NFL off-season.

3. Higher session frequency: A sports bettor might place 2–5 bets per week. A casino player might play hundreds of slot spins per session, with sessions multiple times per week. Revenue accrues faster.

4. Lower tax rates in some states: New Jersey iGaming is taxed at 15% of GGR. Sports betting in New York is taxed at 51%. The relative attractiveness of iGaming economics vs. sportsbook economics varies by state but is often favorable.

The expansion optionality: The U.S. iGaming TAM is enormous if more states legalize. Estimates suggest that if all U.S. states legalized iGaming, the market could generate $40–60B in annual GGR — significantly larger than the $10–12B sports betting market. New York, Illinois, and California legalizing iGaming would dwarf any single sports betting state launch.

Daily Fantasy Sports and Other ($0.32B, 7% — Mature Segment)

DraftKings was founded as a daily fantasy sports platform — contests where players draft a lineup of real athletes and compete based on their actual statistical performance. DFS revenue has plateaued as real-money sports betting has become legal and available in more states. Many former DFS players have migrated to sports betting (same entertainment spend, different product format). DraftKings still operates DFS as a product, but it’s no longer a growth driver. The “Other” category also includes B2B technology licensing (DraftKings licenses its sportsbook technology to third parties) and media partnerships.

DraftKings (DKNG) Income Statement

All values in billions USD. Financial data sourced from DraftKings SEC Filings.

The FY2024 income statement tells a clear story: DraftKings is on the profitability glide path. Revenue grew +30.3% while operating expenses grew only +0.9% — extraordinary operating leverage. Gross margin expanded +460 basis points as promotional bonusing costs declined as a percentage of revenue (the maturing market requires less promotional intensity) and the favorable product mix (more SGPs, more iGaming) improved GGR quality. Operating loss narrowed by ~$630M in a single year. The $0.16B gap between operating loss (-$0.15B) and net loss (-$0.31B) primarily reflects interest expense and non-cash items including stock-based compensation.

DraftKings (DKNG) Key Financial Metrics

Key Metric Observations

The gross margin expansion from 38.8% to 43.4% (+460 bps) is the single most important FY2024 story. It represents the combined effect of: (1) reduced promotional bonusing as a % of revenue — DraftKings spent aggressively on free bets in 2021–2023 to win market share; that investment is now paying off in a maturing customer base that requires less incentivization; (2) hold rate improvement — more profitable bet types (SGPs, parlays) increase revenue per dollar wagered; and (3) iGaming mix growing — online casino carries higher gross margins than sports betting. If this trajectory continues, gross margins could approach 50–55% in 2–3 years.

Operating expense flat (+0.9%) while revenue grew +30.3% is the operating leverage story. DraftKings built its technology platform, compliance infrastructure, and headcount for a much larger business — those fixed costs are now being leveraged over a fast-growing revenue base. Each additional dollar of revenue at the margin costs very little in incremental operating expense (outside of variable items like gaming taxes and promotional bonuses, which are already captured in COGS). This dynamic means that the path from -3.1% operating margin to +10%+ does not require cost cutting — just continued revenue growth.

MUP growth of +23% from an already large base signals the market is not yet saturated. At 3.8M MUPs, DraftKings is reaching a fraction of the addressable market of U.S. sports bettors. The NFL alone has 180M+ fans; approximately 55M Americans placed a legal sports bet in 2024. The penetration rate has room to grow as mobile betting normalizes and new state launches bring in new players who had previously used offshore or informal bookmakers.

Is DraftKings (DKNG) Profitable?

Not yet on a GAAP basis — but the trajectory makes FY2025 GAAP profitability credible.

• Net loss: -$0.31B (FY2024) vs. -$0.91B (FY2023) — a $600M improvement in one year
• Operating margin: -3.1% — the closest DraftKings has ever been to GAAP operating breakeven
• Adjusted EBITDA: Positive in FY2024 — the industry-preferred metric excluding SBC, depreciation, and one-time items
• Free cash flow: Still negative on a GAAP basis due to the remaining losses; approaching FCF breakeven

The profitability debate for DraftKings is less “if” and more “when at what margin level.” The structural economics support eventual 15–25% EBITDA margins (consistent with mature European online gambling operators like Flutter and Entain) once the U.S. market matures, promotional intensity permanently normalizes, and the state tax headwinds stabilize. The path: continued same-store revenue growth + more states legalizing iGaming + hold rate improvement + operating leverage on fixed costs.

Where Does DraftKings Spend its Money?

Gaming Taxes (~$1.1B — the Biggest External Cost)

State and local taxes levied on Gross Gaming Revenue (GGR) are the largest and most politically sensitive cost. Tax rates vary enormously by state:

• New York: 51% of online sports betting GGR — the highest in the U.S. by far
• New Hampshire: 51% (DraftKings is the exclusive state operator, which offsets the high rate)
• Illinois: Progressive scale topping at 40% (raised from 15% flat in 2024)
• Pennsylvania: 36% on online slots, 16% on table games / sports betting
• Indiana, Colorado: ~10–15%

The Illinois tax increase in 2024 was the most significant single regulatory event affecting DraftKings’ financials. Illinois is one of the largest legal sports betting markets in the U.S. (population 12.7M); raising the tax rate to 40% compresses DraftKings’ Illinois-specific gross margins dramatically.

Promotional Credits (~$0.7B — Customer Acquisition and Retention)

Sign-up bonuses, free bets, deposit matches, and odds boosts are how DraftKings acquires new customers and retains at-risk existing customers. These costs are treated as a reduction to GGR (revenue is reported net of promotional credits), so the $0.7B figure represents the economic cost of promotions that was absorbed by DraftKings rather than booked as additional revenue. Promotional spending peaked in 2021–2022 and has been declining as a % of GGR as the market matures — this is a key driver of gross margin expansion.

Technology and Platform (~$0.6B)

Engineering costs to build and maintain: the DraftKings mobile app (iOS and Android), the sportsbook odds engine (pricing millions of events daily), real-time in-game betting infrastructure, the iGaming platform, payment processing integrations, and compliance technology (anti-money laundering, age verification, geolocation). DraftKings built its own proprietary sportsbook technology (migrating off third-party SBTech infrastructure that it acquired in the 2020 SPAC merger) — a multi-year investment that now provides competitive flexibility.

Sales & Marketing (~$1.1B)

Advertising across TV (NFL broadcast sponsorships), digital (Meta, Google, YouTube), podcast sponsorships (Bill Simmons, Barstool), and celebrity endorsements. DraftKings has major league sponsorship deals with the NFL, NBA, MLB, NHL, PGA Tour, and UFC. Sports media companies like Disney/ESPN, Warner Bros Discovery, and Comcast/NBC Sports are both advertising partners and potential competitive threats (ESPN Bet via Penn Entertainment being the clearest example). Social media platforms Meta and Alphabet are major beneficiaries of DraftKings’ advertising spend.

General & Administrative (~$0.75B)

Compliance and licensing costs across 28+ regulated jurisdictions, legal (ongoing regulatory and IP matters), finance, HR, and executive management. Operating in 28+ states means maintaining 28+ gaming licenses, 28+ compliance programs, and 28+ regulatory relationships — the overhead per state is meaningful.

DraftKings vs. Comparable Online Gambling Companies

DraftKings History and Milestones

DraftKings (DKNG): What to Watch

1. GAAP Profitability Achievement in FY2025 Management has guided for GAAP profitability in FY2025 — the most significant milestone in DraftKings’ public company history. The path requires: continued gross margin expansion (less promotional bonusing as % of revenue), sustained revenue growth at 20%+ covering the remaining fixed costs, and no major adverse tax events in large states. If DraftKings achieves GAAP profitability on the guided timeline, it validates the entire investment thesis. A miss — driven by tax headwinds, competitive promotional escalation, or weaker-than-expected revenue growth — would damage management credibility and investor confidence in the long-term margin model.

2. State Gaming Tax Rate Risk: Illinois as a Warning Illinois raised its sports betting tax rate to a progressive scale topping at 40% in 2024 — up from a flat 15%. This had an immediate and material impact on DraftKings’ Illinois economics. Several other large states (New York is already at 51%) have shown willingness to raise taxes on online gambling operators, who are seen as high-profit enterprises with limited political leverage. If New Jersey (DraftKings’ largest iGaming market, taxed at a relatively modest 15%) raises its iGaming tax rate, or if Pennsylvania raises its sports betting rate above 36%, the profitability timeline extends. Monitoring legislative sessions in key states is critical.

3. iGaming Legalization Pipeline: Texas, California, New York, Illinois iGaming is currently legal in only 6 states. If a major new state legalizes — particularly New York (population 20M, iGaming study approved), Illinois (population 12.7M), or Texas (population 30M, very early stage) — the revenue upside would be transformational. Each large state legalization effectively adds a new high-growth revenue stream that takes 2–3 years to mature. DraftKings’ iGaming technology and brand are already built; the only barrier is state legislation. Tracking legislative sessions, ballot initiatives, and tribal gaming compacts in target states is the primary long-term catalysts watch.

4. Hold Rate Trajectory: SGP Mix and Parlay Adoption The sportsbook hold rate improvement from ~9.0% to ~9.5% year-over-year is worth approximately $150M in additional revenue on $30B of handle — without acquiring a single new customer. As the SGP product matures and parlay-friendly bettor segments grow, the hold rate could continue trending toward 10.5–11%. Each 50 basis points of hold rate improvement on $30B+ of handle generates $150M+ of pure gross profit. Quarterly disclosures of handle and hold trends are the most important operational metric to watch.

5. FanDuel / Flutter Competitive Dynamics FanDuel maintains a small market share lead over DraftKings in sports betting. The question is whether the duopoly holds or whether one company begins taking significant share from the other. ESPN Bet’s performance under Penn Entertainment is the most watched competitive threat — if the ESPN brand distribution model cracks the customer acquisition problem at scale, the two-player duopoly could become a three-player market. DraftKings’ quarterly market share data (disclosed indirectly via handle and revenue vs. industry estimates) is the primary competitive signal.

6. Cross-Sell: Sports Betting Customers into iGaming DraftKings has approximately 3.8M monthly active sports bettors. If it can convert a meaningful fraction into iGaming customers — who generate 2–3x the ARPMUP of sports-only customers — it can grow revenue significantly without acquiring new customers. The cross-sell rate (sports-to-casino conversion) is a key internal metric. As the casino product improves (more live dealer games, slot titles, loyalty program integration) and marketing becomes more targeted, the cross-sell conversion rate should improve.

7. Technology and In-House Sportsbook Platform Advantages DraftKings completed a multi-year migration from third-party SBTech technology to a proprietary in-house sportsbook platform. This gives DraftKings: (1) lower third-party technology costs, (2) greater flexibility to launch new products (SGP variants, micro-markets, player props) faster than competitors still on licensed third-party platforms, and (3) the ability to license the technology to third parties for B2B revenue. The platform advantage is hard to quantify but increasingly important as product differentiation (not just promotional spending) determines which sportsbook customers prefer.

8. Responsible Gambling Regulation and Reputational Risk As online sports betting has expanded, concerns about problem gambling have grown significantly. Several states are implementing stricter responsible gambling requirements — mandatory loss limits, cooling-off periods, advertising restrictions, and operator accountability for high-risk bettor behavior. An adverse regulatory event (a widely covered harm incident tied to DraftKings, a congressional investigation, or a major state implementing severe advertising restrictions) could create brand damage and regulatory restrictions that compress growth. DraftKings’ responsible gambling program quality and proactive engagement with regulators is both an ethical imperative and a business risk management priority.

DraftKings (DKNG) Financial Summary

DraftKings (DKNG) is the online gambling and sports gaming company that generated $4.77 billion in total revenue in FY2024 — up +30.3% year-over-year — from online sports betting ($2.90B, 61%) and iGaming/online casino ($1.39B, 29%). Gross margin of 43.4% (+460 bps) reflects improving promotional bonusing discipline and the growing contribution of higher-margin iGaming and same-game parlay products.

Operating margin improved from -21.3% to -3.1% in a single year — one of the most dramatic profitability improvements among large-cap public companies in FY2024 — driven by operating leverage as revenue grew +30% while operating expenses grew only +1%. Net loss narrowed to -$0.31B (from -$0.91B in FY2023), and adjusted EBITDA turned positive for the first time. DraftKings has guided for GAAP profitability in FY2025.

The long-term thesis: DraftKings and FanDuel own a durable duopoly in U.S. online sports betting (combined ~65–70% market share), and iGaming expansion — currently legal in only 6 states but already generating $1.39B — represents a multi-year TAM expansion opportunity that could be larger than the entire sports betting market if it legalizes broadly.

Related companies include Penn Entertainment, MGM Resorts, Wynn Resorts, Disney (ESPN/ESPN Bet), Meta, Live Nation, and Comcast.

Frequently Asked Questions

How does DraftKings make money? As the “house” — DraftKings collects all bets, pays out winnings, and keeps the difference (Gross Gaming Revenue). In sports betting, the hold rate is ~8–10% of total handle. In iGaming (casino), house edge is 2–5% per game mathematically. FY2024: $4.77B revenue (+30.3%).

Is DraftKings profitable? Not yet on a GAAP basis — FY2024 net loss was -$0.31B (improved from -$0.91B in FY2023). Adjusted EBITDA turned positive in FY2024. Management has guided for full GAAP profitability in FY2025. Operating margin improved from -21.3% to -3.1% in one year.

What is DraftKings’ gross margin? 43.4% in FY2024 (+460 bps YoY). Lower than software companies because DraftKings pays state gaming taxes (10%–51% of GGR by state) and promotional bonusing costs. Improving as promotions mature and iGaming (higher margin) grows.

What states is DraftKings live in? 28+ states for sports betting; 6 states for iGaming (online casino: NJ, PA, MI, CT, WV, DE). Largest unlaunched opportunities: Texas, California, Florida (sports betting); New York, Illinois, Texas (iGaming).

What is DraftKings’ biggest risk? State gaming tax increases — Illinois raised rates to 40% in 2024, directly compressing margins. New York is already at 51%. If other large-revenue states raise rates, the GAAP profitability path extends. Additionally: FanDuel competition and the slow pace of new state iGaming legalization.

What is a same-game parlay (SGP)? A bet combining multiple outcomes from a single game (e.g., Chiefs win + Mahomes 300+ yards + Kelce TD). If all legs hit, the payout is large. DraftKings promotes SGPs because they carry a much higher hold rate (~20–30%) than straight bets (~5–6%) — making them the most profitable bet type per dollar wagered.

Who are DraftKings’ main competitors? FanDuel (Flutter Entertainment) is the primary rival — together they hold ~65–70% U.S. sports betting market share. BetMGM (MGM Resorts), ESPN Bet (Penn Entertainment), and Caesars Sportsbook are the next-tier competitors.

What is the iGaming opportunity for DraftKings? Online casino is legal in only 6 U.S. states but already generates $1.39B in DraftKings revenue (+48% YoY). iGaming has a higher house edge, year-round play (vs. sports-seasonal), and higher session frequency than sports betting. If major states like New York or Illinois legalize, the revenue upside would be transformational.