DraftKings Unveils Progressive Parlays, Touts Vintage State Growth

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DraftKings unveiled a new feature Tuesday, in the spirit of what has accelerated the company’s recent growth in older states.

The DraftKings Progressive Parlay will allow customers to win money from parlays even if every leg does not hit. It is designed to generate more parlay legs, which have nearly doubled for DraftKings over the past year. That is fueling a more than 50% spike in net revenue in states where the company’s been active for at least two years.

“We’re excited about our Progressive Parlay offering and its potential to generate higher parlay mix and leg count, and thus higher hold percentage, as well as being a great win with customers who will be able to win money on their parlays even if they don’t win every leg of their bet,” CEO Jason Robins said during the company’s Investor Day presentation.

DraftKings stock closed at $37.03 Tuesday, up 4.5% on nearly double its average daily volume.

How will progressive parlays work?

DraftKings bettors will be able to combine three to 12 over/under selections in one parlay that does not require all legs to hit for a payout. If all legs of a progressive parlay hit, however, bettors stand to win much less than a traditional parlay.

In an example provided by DraftKings:

There is no timetable to launch the feature.

DraftKings CEO eyeing DFS apps?

Robins appeared to direct one comment toward daily fantasy sports operators offering similar products:

“As far as we’re aware, no sportsbook operators in the US offer progressive parlays, certainly no major sportsbook operators,” Robins said.

DFS app PrizePicks has a similar option called “Flex Play,” though it is not regulated as a sports betting product, which an increasing number of states have cracked down on.

Hard Rock Bet has a similar product called “Flex Parlay,” which it unveiled earlier this year as it rebranded its sports betting app. In the example provided by DraftKings, the company noted Progressive Parlays will be “regulated as sports betting.”

DraftKings growth streak in older states

States where the company launched between 2018 and 2021 are expected to produce roughly 52% more in net revenue this year than last year, according to the company’s presentation.

“Starting in 2023, older states began to generate enough contribution profit to cover investments in newer states, such that we generated positive adjusted EBITDA in Q2,” CFO Jason Park said. “We have acquired four times as many customers in 22-23 as we did in 18-19 in vintage [states] at same point in time.”

DraftKings had a 39% share of sports betting handle and a 27% share of iGaming handle over the last three months when it was the leader in combined market share for both. During that period, DraftKings spent the most of any sportsbook on promotions, according to LSR data.

$2 billion forecast for 2028, without new states

DraftKings is now forecasting adjusted EBITDA of:

That total is in line with previous estimates, though those accounted for additional online sports betting and iGaming states. More legalization could boost adjusted EBITDA by an extra $6.2 billion, Robins said.

What is fueling vintage state growth?

DraftKings expects to finish the year with a 9.5% hold rate, up from 7.7% last year. Much of that increase, 1.2 percentage points, comes from higher leg counts in the average parlay which have nearly doubled year over year.

This is the first year DraftKings had a better product than its “chief competitor,” Robins added.

“The more data we get the better we do. One of the hardest things early in this industry was we just didn’t have enough history. The more data we get, the better we get across the board,” Robins said.

How changes factor in for DraftKings

Product changes from last year to this year include moving from third-party technology to in-house technology to price same-game-parlay legs and combined SGPs, as well as adding dynamic odds.

The company is in the process of adding SGP cash-out options, which Robins lumped in Progressive Parlays, as part of the company’s “continuing roadmap of innovation.”