DraftKings Lowers Full-Year Outlook Due to “Customer-Favorable Sports Outcomes”

DraftKings Lowers Guidance

Initially, analysts expected DraftKings’ revenue to reach $5.13 billion; however, the company now anticipates revenue in the range of $4.85 to $4.95 billion, reflecting a decrease from previous projections.

Profit expectations have also been revised. DraftKings now forecasts adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be between $240 million and $280 million, down from the previous range of $340 million to $420 million and below Wall Street expectations.

Why DraftKings Lowered Its Guidance?

DraftKings attributed the forecast reduction to “customer-favorable sports outcomes” in Q4. This trend has led to a projected $175 million reduction in adjusted EBITDA and a $250 million decrease in forecasted revenue.

The company noted that during the first five weeks of the fourth quarter (starting October 1), favorites often won, affecting the betting results.

Reasons for Optimism

Despite the forecast downgrade, DraftKings has seen improvements in several key areas. The company enhanced its ability to identify lower lifetime-value customers, particularly in high-tax states, and improved marketing efficiency, which has partially offset the decline in adjusted EBITDA.

In Q3, DraftKings saw a 14% year-over-year increase in customer count, with a nearly 20% reduction in acquisition costs.

The number of unique monthly players rose by 55% to 3.6 million, though about half of this growth is attributed to the acquisition of Jackpocket. The average revenue per unique monthly customer stood at $103, a 10% decrease year-over-year, also impacted by Jackpocket.

DraftKings has also made enhancements to its sportsbook platform, including new NBA betting features and improved live betting functions. In early 2025, the company plans to begin separately reporting its net revenue for sports betting and iGaming to help investors better understand revenue trends.