DraftKings Eyes Parlay Parity With FanDuel: ‘We Continue To Close That Gap’

Written By

Updated on


It’s all about parlay parity. That was one of the key messages from DraftKings Q2 results on Friday.

The company increased its mobile parlay mix by 17 percentage points (pp) year-on-year during the quarter.

In other words, the percentage of bets that were parlays increased by 17pp. That helped increase hold rate and boost revenues, DraftKings said. 

Parlay party

The parlay uptick was driven by:

“We’re seeing great success driving parlay mix in our sportsbook product,” said DraftKings CEO Jason Robins

Not done yet

Robins added on the subsequent analyst call: “We’re obviously not done. And I think we can hopefully see [the parlay mix] continue to go up.”

Robins was asked about DraftKings’ targets for parlay mix and hold, and said FanDuel represented a “minimum ceiling.”

FanDuel has historically run a couple of percentage points higher on hold than DraftKings thanks to its SGP offering:

FanDuel has historically run a higher hold rate than DraftKings. Source: State data

“We continue to close that gap, and they continue to increase [their parlay mix] too,” Robins said. “So it feels like there’s a pretty high ceiling there.”

DraftKings is also introducing a new feature to let customers parlay SGPs.

DraftKings Q2 numbers

Q2 revenue rose 56.6% to $466.2 million, while adjusted EBITDA loss rose 23.9% to $118.1 million. Both beat analyst expectations.

DraftKings also raised its 2022 revenue and EBITDA guidance, prompting a 10% jump in the stock on Friday to $18.31. 

What else did we learn from DraftKings Q2 call?

Robins said Ontario sports betting was “going as expected,” which is to say, not quite as well as US launches.

“We have projected 10% to 20% share in Ontario as opposed to 20% to 30% in US states,” Robins said. “We said pretty consistently we thought it would be more of a slower grind given the nature of the market where there was just a lot of continuity from the gray market.”

Multiple US sportsbooks have echoed that message about the strength of the gray-market firms this earnings season.

Money in the bank

Elsewhere, Robins said he had “more conviction than ever” that DraftKings would reach positive free cash flow with current capital reserves.

He added: “Despite that conviction, we are still making a concerted effort this year to drive efficiency opportunities and early (Golden Nugget Online Gaming) synergies and have already identified approximately $100 million of cost reductions for this year.”

DraftKings ended Q2 with around $1.5 billion on the balance sheet.

Land of milk and honey

Out west, DraftKings is “cautiously optimistic” about California sports betting passing in November.

“We feel just as optimistic as we did a quarter ago,” Robins said. “I continue to believe that we’ll get this over the line. But there’s still a long way to the election, so lots can happen. We’re certainly not celebrating yet, and things could swing either way.