How Will Kambi Make Up Major Revenue Hit From DraftKings Exit?

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Kambi will lose 20 to 30% of its revenue at the end of September when DraftKings completes its migration to its proprietary platform.

Kambi said Friday the migration was already complete in all states except Virginia and New York.

The DraftKings change will have a big impact on Q4 numbers, and potentially contributed to a 10% drop in Kambi’s share price Friday.

Short-term hit for Kambi

“It’s a big challenge and a tough one to overcome,” said CFO David Kenyon at the firm’s Q2 results. “It is hard to say whether we can replace that in Q3 and Q4. We are looking longer term at FY22 and 23.”

However, the sportsbook provider said it had plenty of tailwinds to help make up the shortfall over the longer term.

Opportunities for Kambi

Kambi highlighted New York and Canada sports betting as potential opportunities.

“New York is still fluid, but I am quite certain we will have operators who will bid with us,” said Kambi CEO Kristian Nylen.

“It is quite clear we are in a good position to be a platform provider for our operators. The scoring system looks promising for us and our partners. But it is a bid so nothing is given.  I cannot tell you more than that but I’m optimistic.”

Process is moving in New York

New York released the bidding details for NY sports betting on July 8. Applicants have 30 days from that date to submit bids.

Then the New York State Gaming Commission has 150 days to select the winner, which is now a Jan. 6, 2022 deadline after the delay.

Kambi’s most obvious partners in New York would be Penn National, which operates Barstool Sportsbook, and the Seneca Nation tribe.

Looking to the North

As for Canada, Nylen said Kambi was uniquely well-placed thanks to its expertise in hockey, learned in Sweden.

Nylen said Kambi hoped to be live from day one in Ontario sports betting with its partners. Canada could be a $2.5 billion market by 2026, Nylen said.

Mixed bag of results for Kambi

The comments came at Kambi’s Q2 results, where company revenues climbed 189% year-on-year to $50 million.

Operating result was an additional $19.5 million after a $4 million loss in the same period last year.

However, the company’s share price fell 10% in Stockholm, thanks to a sequential decline in operator turnover and the looming DraftKings migration.