Published: May 8, 2022

The whacky world of sports betting economics, politics, and regulatory policy-making

DraftKings Q1: Expenses of $933 against Revenues of $417 = $463 Loss

DraftKings raised its revenue guidance for the financial year following its latest earnings report on Friday, but the sportsbook has taken a hit amid concerns over profitability. 

The Boston-based company posted revenue of $417 million in Q1 2022, up from $312 million for the same period the year prior. DraftKing’s Q1 growth was driven by the company’s B2C segment, which generated $404 million in revenue, a 44% increase compared to Q1 2021. 

  • It raised its FY2022 guidance by $50 million to between $1.9 billion and $2 billion
  • DraftKings reported 2 million monthly unique payers in Q1, a 29% uptick from Q1 2021.
  • It reported that inflationary pressures had no impact on its business in Q1 2022. 

Despite what seems to be a strong start to the financial year, DraftKings faces an uphill battle to reach profitability. The company saw its operating expenses in Q1 2022 reach $933 million, a 46% increase year-over-year. DraftKings also reported a net loss of $468 million during the quarter, compared to $346 million for the same period the year prior.

Shares of the company have also tanked around 74% in the past year, from nearly $52 to $13. 

DraftKings, which is live with online sports betting in 17 states, hopes to improve its woes with successful launches of legalized mobile betting in New York and Louisiana in Q1 2022.,%24346%20million%20in%20Q1%202021.

DraftKings raises full-year guidance, expecting a return in sports



  • DraftKings reported a better-than-feared loss per share and higher revenue for its first quarter and raised its full-year revenue guidance.
  • The sports-betting company said it had 1.5 million monthly unique paying customers.
  • The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from $900 million to $1 billion.

Sports-betting company DraftKings on Friday reported a better-than-feared loss per share and higher revenue for its first quarter and raised its full-year revenue guidance.

Shares gained 3.7% in Friday’s premarket.

Here are the key numbers:

  • Loss per share: 36 cents vs an expected loss of 42 cents in a Refinitiv survey of analysts
  • Revenue: $312 million vs $236.2 million expected in the Refinitiv survey

DraftKings said it had 1.5 million monthly unique paying customers as of its first quarter, holding onto the gains in made in its fourth quarter. It was expected to report 1.31 million, according to FactSet.

Average revenue per monthly unique paying customer came in at $61 in the first quarter, representing a 48% increase versus the same period in 2020. The company said it was boosted by increased engagement with its iGaming and mobile sports betting product offerings, as well as cross-selling.

The company also raised its fiscal year 2021 revenue guidance to a range of $1.05 billion to $1.15 billion from $900 million to $1 billion, which equates to year-over-year growth of 63% to 79%. DraftKings credited the expected return of normal sports seasons for the increase in guidance.

“The increase reflects solid performance in the first quarter of 2021, continued strong user activation due to the effectiveness of our marketing spend, well-executed launches of mobile sports betting and iGaming in Michigan and mobile sports betting in Virginia, and a modest contribution from our recently completed acquisitions,” the company said. “This guidance also assumes that all professional and college sports calendars that have been announced come to fruition and that we continue to operate in states in which we are live today.”

Friday’s report marks the company’s first full year as a publicly traded company since it went public last April via a SPAC. The company has been able to ride growing sports betting legalization across the United States, helping expand its market reach. DraftKings is live with online sports betting in 12 states.

Currently, 21 states and the District of Columbia allow online sports betting, up from 20 this past quarter. Six states legalized sports wagering but are not yet operational, and 13 states are working on legislation.


Sports Betting Companies minimize tax liabilities by deducting promotional benefits targeted to attract new players

Virginia sports betting revenue offset by tax breaks


May 2, 2022 

Virginia has collected $26.7 million in tax revenue since launching legalized sports betting last year. However, the state may be leaving nearly that much on the table.

According to Virginia Lottery numbers reviewed by the Richmond Times-Dispatch, sports betting companies have offered $168.8 million in “bonuses and promotions” to customers since launching.

Those often take the form of free bets, offered to entice customers to join a particular betting service.

Because of the way Virginia law is structured, that promotional money is allowed to be deducted off of each company’s adjusted gross revenue before the tax rate is applied.

As a result, of the 12 companies currently taking sports bets in the state, only five have paid any taxes since launching.

Del. Mark Sickles, D-Fairfax, introduced legislation this year to eliminate the tax break, but it did not make it out of its committee, and was not voted on by the General Assembly.

According to a February study by the Tax Foundation, of the 30 states with legalized sports betting, eight currently offer companies the ability to write off promotional expenses.

The logic was that allowing promotional expenses would help build up the betting market faster. However, other states, including New York, have also launched to eye-popping numbers without allowing the write-off.

The Virginia Lottery, which is tasked with administering sports betting, releases updated numbers monthly.

In the most recent report, covering the time period through March 2022, companies have taken $4.58 billion in wagers, and paid out $4.19 billion in winnings on those bets.

That means the promotional write-offs negate 43.7% of the revenue Virginia’s government could tax.

The five companies that have paid taxes are Barstool Sports, BetMGM, DraftKings, FanDuel and Hard Rock digital.

Caesars, which has 9.7% of the Virginia betting market, was the largest company that has yet to make a tax payment.

A Lottery spokesperson noted that the organization has not been tasked with creating policy, only implementing what the General Assembly has arranged.

The most impactful outcome was in Colorado, which earmarked sports betting revenues to help with a water shortage crisis.

But in the first full year, gambling revenues fell short by about half of projections, while according to Bloomberg, the operators deducted 62% of their revenue, thanks in large part to promotional expenses.

The window has closed for Virginia to address the problem in this year’s General Assembly, but it is expected to take up the issue again in future years.

Maine Legalizes Sports Wagering: State's tribes will control digital wagering, which likely won't launch until next year


May 2, 2022

Maine Gov. Janet Mills on Monday signed into law LD 585, the bill that would give digital sports betting to the state’s four tribes.

The measure passed by the legislature shuts out the state’s two brick-and-mortar casinos, owned by Churchill Downs Inc. and Penn National Gaming, from having online platforms. There is nothing in the bill, however, that would prevent Churchill Downs or Penn National from partnering with a tribe, though the high revenue share with the state wouldn’t make that an attractive option.

The new law, which becomes effective in 90 days, does not include a deadline for going live. It appears unlikely that the Maine Gambling Control Unit could promulgate and approve rules soon enough to launch by the NFL season. It’s more likely the regulator will aim to go live ahead of the Super Bowl. The tribes, which have little to no gaming experience, will also need time to figure out if they will partner with a major operator, white label, or create their own platforms.

The bill is a complete turnaround from legislative action in 2019 that would have made Maine one of the most open, competitive markets in the U.S. Mills vetoed that bill in 2020, and even though the legislature in 2021 passed another open, competitive bill, Mills opted to use wagering as a political football and a peace offering with the state’s tribes, which don’t enjoy the same kind of sovereignty as other federally recognized tribes. Mills failed to sign a bill that would have granted that sovereignty.

Next up: Kansas

The new legislation in Maine came as a surprise to Churchill Downs and Penn National earlier this year, but neither might push back too hard, at least not right now. While Maine is the first state to legalize this year, stakeholders are waiting with more interest for Kansas Gov. Laura Kelly to sign a much friendlier wagering bill, and many are involved in the effort to legalize betting in California — the country’s largest state with more 39 million residents as compared to Maine’s 1.3 million.

Brick-and-mortar casinos and off-track betting parlors will be able to offer in-person wagering in Maine, which becomes the fourth New England state to legalize after Rhode Island, New Hampshire, and Connecticut, where betting went live last fall. The state will have up to four platforms, as each tribe in the Wabanaki Nation is entitled to a single skin, or platform. That pales in comparison to the potential in previous bills, which would have allowed for as much competition as the state could support.

Mills’ signature essentially kills LD 1352, the bill supported  by commercial operators that has been sitting on the state’s “Appropriations Table” since last summer.


Law giving Maine tribes sports betting revenue is bittersweet

Control of mobile sports betting given to Native American tribes in Maine while reducing the tribal tax burden and creating a framework for greater collaboration, but stops short of sovereignty for tribes

May 5, 2022

PORTLAND, Maine — Democratic Gov. Janet Mills signed a law Monday giving control of mobile sports betting to Native American tribes in Maine while reducing the tribal tax burden and creating a framework for greater collaboration.

The governor touted the new law as the most significant tribal bill in decades, even though it does not go as far as a separate proposal that would have provided far-reaching sovereignty for the state's tribes.

“This law provides meaningful economic opportunities for the Wabanaki Nations. It incentivizes investment in tribal communities, and it formalizes a collaboration process on policy that sets the foundation for a stronger relationship in the future,” the governor said in a statement.


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