Can DraftKings Succeed Where Others Have Struggled With Social Betting?

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Will DraftKings be the sportsbook that finally creates a robust social platform around sports betting?

The company announced during its Q1 earnings call plans to roll out social functionality across sportsbook and DFS products in the coming weeks.

The update will allow users to add friends, see what people are betting, and discuss wagers and DFS entries.

DraftKings sportsbook said the social features were an “industry-first innovation.”

Mixed Q1 results for DraftKings?

The new features were announced Friday alongside the DraftKings Q1 results.

The company posted 175% revenue growth in Q1 to $312 million and upgraded its 2021 revenue guidance. The new guidance is $1.05 billion$1.15 billion, up from $900 million $1 billion.

Monthly Unique Payers (MUPs) climbed 114% to 1.5 million for the quarter. The increased guidance reflected strong user growth and retention, the company said.

Cause for concern?

However, there were some red flags in the earnings. The company made a net loss of $346 million, thanks to massive operational costs.

That included $229 million on sales and marketing and around $150 million on stock-based compensation for execs. The loss figures suggest DraftKings is currently getting less bang for its buck than key competitors.

The operator has around $2.8 billion in cash on-hand, which will be used for new state launches, marketing ,and potentially more M&A.

DraftKings stock ticked down 1% on Friday to $51.50.

Not competing with Twitter

CEO Jason Robins said the social features were a popular request from customers and should improve stickiness.

“The product is particularly unique because it amplifies our ability to create an interconnected ecosystem across our consumer products,” DK said in a statement. “Features like universal profiles, friends lists, commenting and loyalty/rewards will allow DraftKings to connect users across products.”

Robins said the company is not trying to compete with Facebook or Twitter, but simply improving the DK experience.

A brief history of social betting

Sportsbook around the world have tried social features before, albeit with relatively little traction. The Smarkets SBK app has a social network within it, as does the BetBull app acquired by Wynn last year.

Chicago-based start-up Betsperts is also trying to build a social network for gamblers.

In the UK, operators like Sky Bet have experimented with features like Group Bets, where users each add a leg to a parlay. FanDuel founder Nigel Eccles is working on new project Flick, where users meet virtually to discuss sports and bets. 

Another UK company called Colossus Bets lets users pool their funds in a ‘Syndicate’ to enter betting pools.

However, operators always have struggled to make the social experience as slick as existing social media platforms. Why would gamblers switch from their Twitter accounts to a DK social experience?

That is the question DraftKings will need to answer.