Could DraftKings Sportsbook Clear $1 Million?
Legal Sports Report

DraftKings Sportsbook Made A Lot Of Money In August, But How Much?

DraftKings Sportsbook

DraftKings released its DraftKings Sportsbook offer in New Jersey on August 1, which means it will be the only mobile sports book reporting full-month revenues when the Division of Gaming Enforcement (DGE) produces its monthly revenue report next week.

playMGM got its mobile sportsbook out of the gates in a respectable second position, with a launch on August 22. Rush Street Interactive entered the market a day later with its PlaySugarhouse book, but unless there’s a deus ex machina intervention, DraftKings will have more August revenues than anyone.

DraftKings will cash in heavily, but what will that record be? A bit of speculation on the numbers is in order.

Mobile sports betting grows beyond online

To ‘guesstimate’ the numbers DraftKings Sportsbook will record, we need first to take a glance across the Atlantic to the big European sports books. There we find that mobile sports betting is big sports betting.

The last five years have seen all the major online gambling operators report that mobile sports betting is much bigger than normal online sports betting.

The first New Jersey sports bet was placed at the Monmouth Park race track by Governor Phil Murphy on June 14. Monmouth Park’s sports betting platform has been provided by William Hill, while its competitor at the Meadowlands Racetrack is powered by FanDuel, newly acquired by Paddy Power Betfair (PPB).

Paddy Power Betfair one of the first

PPB was one of the pioneers of mobile sports betting. As long ago as Q1 of 2006, PPB reported that:

“Mobile continues to be the key driver of sportsbook growth and now represents 76% of revenues.”

In fact the use of mobile devices for sports betting is now so ubiquitous that in its annual reports, PPB no longer mentions the share of online business carried out on mobiles. As far as online sports betting goes, mobile sports betting is sports betting.

US sports betting has been confined to Nevada for a long time, but the operators there know and understand the critical role of mobile. Nevada doesn’t split out mobile sports betting numbers in its gaming reports, but the fact that playMGM was second to market is telling. Some speculation suggests mobile makes up an enormous piece of the pie.

MGM knows how big mobile is in Nevada, even though it only launched its mobile sports betting app in May 2017.

Online is a major piece of all sports betting

Globally, online sports betting is about 11 percent of the sports betting market. That number is higher in countries with more smartphones and with more developed sports betting markets such as the UK.

However, there are some factors that will change the game in New Jersey. In the UK, there are thousands of ‘Main Street’ betting shops where sports bettors can lay their wagers. In New Jersey there are relatively few physical locations where bets can be made.

The current list of active sports betting operators in NJ is:

  • Borgata
    • playMGM (under Borgata license)
  • Bally’s Wild West Casino sportsbook
  • Ocean Resort Casino sportsbook
  • FanDuel Sportsbook at the Meadowlands Racetrack
  • Monmouth Park
    • William Hill (under Monmouth license)
  • Harrah’s
  • Resorts
    • DraftKings (under Resorts license)
  • Sugarhouse (under Golden Nugget license)

More may well be added by the end of the month, but the point remains that at the moment, it’s a trip to a casino or racetrack to place a live bet. Online and mobile are the easiest point of entry for New Jersey sports bettors, especially if they don’t want to make the trip to Atlantic City.

The lack of physical alternatives for online sports betting should create a situation where online sports betting’s market share is higher than international comparators.

To speculate: let’s assume online and mobile sports betting take 20 percent of New Jersey’s action. Of that slice, if mobile represents 80 percent and online accounts for 20 percent, then we can make a rough estimate of New Jersey revenues and how much DraftKings Sportsbook has benefited from its early market entry.

DraftKings Sportsbook could record a $1 million month

When the DGE published its first full month of sports betting data, Eric Ramsey took it to pieces and estimated that in July — assuming all of the three operators were in the market for the full 30-day month — the figures would have been:

  • Handle: $28,958,151
  • Revenue: $6,103,532
  • Taxes: $518,801

August is a 31-day month, so putting in that adjustment and taking 20 percent gives us an estimate for total August online revenue of more than $1.2 million. Following our assumption that 80 percent of that goes to mobile and we get revenues of roughly $1 million.

DraftKings Sportsbook had the market to itself for 21 days, which suggests that the company enjoyed a benefit of just under $700,000 in revenues all to itself before competitors moved in.

If we keep playing with the numbers and assume DK only picked up half the market for the last 10 days of the month, then it should have pocketed around $850,000 in its first full month of operation.

If things went better than we have speculated, it’s not impossible that DK pulled in more than $1 million in revenues in its first month of operation.

For comparison, in July, the DGE numbers for the Borgata’s sports betting revenue were $986,831 and for Monmouth Park, $2,279,166.

Even if not $1 million, it’s close

Our speculative estimates can be fairly criticized from several directions. We don’t take account of any growth issues — either those of July’s figures as awareness of legal sports betting grows, or the early start-up growth curve that could reduce DK’s results.

But these estimates are somewhere in the ballpark, and indicate to an order of magnitude what the market is likely to be doing in mobile sports betting.

DraftKings Sportsbook launched its sports betting in partnership with the Resorts casino, which also provides the regulatory umbrella for PokerStarsNJ online poker. Stars and Resorts will be putting out their own sports betting soon, but for August this year the DGE revenue figures for Resorts will just be DraftKings.

Joss Wood
- Joss Wood, a former editor of Poker Industry Pro, has long focused on regulated online gambling issues and in particular the international market. For LegalSportsReport.com, Joss turns his attention primarily to regulated sports betting markets. With a degree in English from the University of Birmingham as well as a master’s degree in organisational development from the University of Manchester, Joss’s career has taken him from the British Army into the world of business and finance. For seven years he played poker professionally.