September was a very strong month for DraftKings in this state.
On a national stage, Q3 was also solid for DraftKings as it reported $790 million in revenue for the quarter, coming in ahead of analysts expectations.
DraftKings staying steady in mature markets like Michigan
While DraftKings continues to expand into new states that are launching sports betting, its mature market states like Michigan are aiding in their quarterly revenue.
“We’re very pleased with our results in our more mature OSB (online sports betting) and iGaming states,” DraftKings CFO Jason Park said during Friday’s Q3 investor call. “In the states that launched from 2018 through 2021, we continue to drive very strong handle and revenue growth year over year with a corresponding improvement in Adjusted Gross Margin rate while our external marketing costs decrease at a double-digit rate.”
The online operator for Bay Mills Casino had a great quarter in Michigan. DraftKings Casino Michigan had just under $94 million in iGaming revenue for Q3. That included a record of $37.1 million in September. It was the highest quarter DraftKings Casino MI has had since launch.
When it comes to online sports betting, DraftKings Sportsbook Michigan generated $250.5 million in wagers and $22.8 million in revenue for Q3 this year. Both top Q3 of 2022’s $218.2 million in handle and $21.5 million in revenue.
Chasing BetMGM in Michigan’s online casino market
While DraftKings holds the lead nationally for online casino market share, it is still looking up at BetMGM Michigan here in this state.
September’s $37.1 million in online casino revenue did put it second in the state for the first time since August of 2022. The $11.5 million gap between it and BetMGM ($48.6 million) was the closest it has been to the state’s leader since launch month of January 2021.
DraftKings believes the online casino market is where it can really add to its overall bottom line as more markets eventually open throughout the country.
“IGaming, as we’ve noted in the past, we believe has roughly two times the TAM (Total Addressable Market) on a per capita basis, as online sports betting. So there is tremendous opportunity there,” said Jason Robbins, DraftKings CEO.
“I do think you’ll start to see more momentum in the states in the coming years. It’s just as we thought, in the beginning sports is kind of leading the charge. But, it definitely feels like (iGaiming is) an under talked about opportunity. Much like the sports market feel, we’re very well positioned in having the number one position in the market at this point.”
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DraftKings not worried about ESPN, Fanatics debut
Michigan is set to see some big changes in its overall online gambling landscape in the coming months.
ESPN Bet announced a planned launch for Nov. 14 in Michigan, while Fanatics is making its way to its takeover of PointsBet’s assets here in the state.
Both new brands carry a lot of national recognition for their connection to sports, but DraftKings feels like it has established itself as a reliable product for its consumer base.
“We’ve seen so many ways of competition now and we’ve really always had a highly competitive market. It’s not like we haven’t had fierce competition pretty much from the start. We always expect that there will be competitors that will come and try to give our customers an experience, and we have to give them a better experience,” Robbins said.
“Certainly there are people that will go take promos, and that’ll happen. But in the end, we believe that most customers will gravitate to the best product and the best experience. So we’re going to stay disciplined and I think it’ll probably play out in a very similar fashion to other times”
DraftKings pleased to see Michigan handle illegal gambling
DraftKings first established itself as a daily fantasy brand many years ago.
Now with legal online sports betting becoming more widespread, states like Michigan have begun to ban other DFS sites that utilize over/unders and are too similar to prop betting.
On Oct. 11, the Fantasy Contests Consumer Protection Act took effect, ending sites like PrizePicks from operating in Michigan.
“I definitely think that cracking down on the illegal market is a good thing for us,” Robbins said. “It’s really an issue and probably costing states close to a billion dollars in tax revenues at this point. So, it’s definitely a big deal and something that we’re happy to see states doing”
Along with the banning of certain DFS sites, Michigan has also begun cracking down on social casinos that use a sweepstakes method.
Golden Hearts was deemed illegal gambling by Michigan Attorney General Dana Nessel in September.
Virtual Gaming Worlds elected to shut down operations of sites like Chumba Casino, Luckyland Slots and Global Poker starting Nov. 1.