DraftKings CFO Expects Smaller Ops To ‘Proceed To Throw In The Towel’

Smaller operators will proceed to be squeezed out of US sportsbook betting because the market matures, DraftKings CFO Jason Park speculated final week.

Talking at an investor summit final week, Park was requested how the US sportsbook betting market would evolve within the coming years.

“I feel the aggressive dynamic and the market construction will proceed to rationalize,” Park mentioned. “… maybe a few of these small single-digit market share gamers, extra of them proceed to throw within the towel.”

A US marketplace for the robust

Park contended traders “misunderstood” the market construction and the way robust the main operators’ place is. FanDuel and DraftKings alone account for greater than 60% of the market versus “a protracted tail of single-digit market share operators.”

Park expects that lengthy tail to drop away, which means DraftKings market share is “very defendable, with upside,” the CFO mentioned.

Amongst states that report by model, DraftKings Sportsbook has a 26% share of betting deal with in CY2022. That’s second to FanDuel, which has 36%.

Consolidation is already taking place

Smaller sportsbook betting operators like Churchill Downs are exiting the US sportsbook betting market altogether. Bigger gamers like Wynn, PointsBet and Caesars additionally reduce on their market spend.

Even heavyweight BetMGM is pulling again spend in New York due to issues about profitability within the state.

Park was additionally requested about latest feedback from Caesars that its market share had not but been harm by the spending pullback.

“I feel the proof will probably be within the pudding,” Park mentioned. “Let’s see how that pans out. … I feel we now have to keep watch over whether or not different sportsbooks are capable of retain gamers as effectively [as DraftKings.]”

Two sides to each story

After all there’s some pushback to the thought of a US sportsbook betting oligopoly. Playtech CEO Mor Weizer mentioned final 12 months that a 3rd of the market could be powered by third-party suppliers.

No money crunch for DraftKings

In the identical vein, the exec dismissed the thought DraftKings might need to lift money once more earlier than it might probably flip worthwhile.

Jefferies famous final week this so-called “funding crunch” was factored into the present inventory value. Nevertheless, Park downplayed these issues:

“I absolutely perceive that is prime of thoughts. And if I used to be not deep within the title and I checked out USD2.11 billion [on the balance sheet] at first of this 12 months with -USD875 million EBITDA information, which is now an -USD800 million EBITDA information and some issues that sit between EBITDA and free money circulate, like capitalized software program, you may say ‘effectively, gosh, that feels tight.’”

Parke mentioned the corporate modeled varied eventualities and was “extremely assured” it had ample liquidity to flip worthwhile.

California dreamin’ for DraftKings

Park mentioned that was the case even when California legalized sportsbook betting.

On that entrance, Park was “cautiously optimistic” about voters supporting authorized CA sportsbook betting in November. California would immediately change into the most important betting market within the US, although the net initiative supported by sportsbooks faces heavy tribal opposition.

DraftKings inventory was final up 3% on Monday to USD13.50.