6 Aug: DraftKings readies for NFL return
DraftKings, MGM Growth Partners and Century Q2s
Good afternoon and welcome to this E+M DraftKings newsletter. Revenues were up 297% but losses kept pace. We have the latest from the earnings call where CEO Jason Robins answered questions on everything from growth to third-party partners and NFTs. Plus, we have summaries of the results from MGP and Century Casinos. We hope you enjoy your weekends.
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DraftKings Q2 and earnings call
The top line
Revenues up 297% to $298m, operating losses hit $321.5m vs $160m Q220. Adjusted EBTIDA losses were $95.3m vs $57.5m Q220 and marketing costs came in at $170m.
DraftKings raised FY21 revenue guidance from $1.05bn-$1.15bn to $1.21bn-$1.29bn, implying YoY growth of 88%-100%.
Monthly unique player were up 281% to 1.1 million and ARPU was up 26% to $80 per month.
Mission accomplished: The group’s migration from Kambi to its in-house SBTech-based platform is largely complete, with 11 of the 12 states DraftKings operates in having moved over. From a performance perspective, Robins said vast amounts of testing had been going on and “we want to see how the NFL looks from a trading perspective”; and while same game parlays should improve margins they have not been built into group forecasts. “We want to test thoroughly before we know,” Robins said. The migration will drive innovation and new products where previously the company been dependent on Kambi, he suggested.
A short-term fix: Robins stressed the strong engagement levels and new icasino product launches the group’s tech teams had managed during the quarter. But when asked why DraftKings would not be using its own in-house bet-builder product as part of the Genius Sports deal announced yesterday, Robins said speed to market and getting the product out were more important.
“It’s a good way to get parlays into the product mix in time for the NFL season. In the short term if it’s as good or better than what competitors have, we’ll go with it and over time we’ll take projects that we think can benefit from vertical integration,” Robins added.
Media play: Robins said the ongoing convergence and integration of the group’s sports, sports-betting, media and content production units represented another major play. Industry observers said today’s filings showed DraftKings paid $70m for VSiN and Robins said he was open on the possibility of streaming pay-per-view events, depending on rights or even developing subscription revenues. “We’re looking at all those things,” he said. “We want it to be profit generating in the long term and have synergistic qualities to acquire and retain users.”
Cross-sell traffic: Draftkings’ NFT Marketplace would be a good way for the company to reach potential new customer segments and cross-sell them into OSB and igaming. Robins said liquidity was “very important because that’s where most selling and buying happens.
“We have a much bigger database than other marketplaces and it will come down to how well we cross-sell and we’ve got good experience with that even if it’s our first foray into something different from OSB,” Robins added.
Lobby matters: Robins mentioned the joint lobbying effort DraftKings was undertaking with FanDuel in Florida to get mobile betting on the ballot next year. As for more states regulating the more profitable online casino vertical, he said sports-betting would always be first to be regulated and then igaming. “It’s the natural evolution,” he added. “Many states don’t want to be (seen as) the guinea pig, we’ll keep pushing for it, show it can be well managed with responsible gambling systems and generate meaningful tax revenues.”
Hindenburg defense: DraftKings admitted in the 10-Q that it has been subpoenaed by the SEC in relation to the allegations raised in the Hindenburg report which alleged it failed to disclose information regarding SBTech activities in certain markets. DraftKings said it would defend itself vigorously against the claims.
MGM Growth Properties Q2
The top line
Rental revenue hit $188.3m while AFFO hit $171.8m.
I came, I saw: MGP’s eaqrnings statement was of coruse eclipsed by the news this week of the VICI buyout. More commentary will come later today after the earnings call, but in the trading update, CEO James Stewart gave a rundown of the company;s brief life as a separate entity. "Since our IPO in 2016, MGP completed over $7bn of real estate transactions that grew our portfolio of premier entertainment assets, including introducing innovative transaction structures to the gaming REIT universe,” he said. That track record of success will now be for VICI to build on.
Century Casinos
The top line
Revenue hit $92.2m, up 155% on Q220 while adjusted EBITDA was $25.2m.
Outstanding debt was static at $183.9m at the end of the quarter.
Open sesame: Century’s Canadian and Polish casinos both opened up in the second quarter after Covid-related closures, meaning all Century’s properties are now welcoming back their customers. Wagers,com Earnings+More will report on the call with analysts early next week.
Calendar
9 Aug: Scientific Games, Bally Corporation
10 Aug: Flutter Entertainment, Full House Resorts, FuboTV
Contact us
Scott Longley scott@clearconcisemedia.com
Jake Pollard jake@openmediaservices.com