DraftKings Inc. is coming off a successful Q1 for 2023 according to their latest investor call.
The company touted having the top iGaming market share in the country at 26% for the first quarter of 2023, while its online sports betting market continues to compete for a top spot nationally.
However, in Michigan, DraftKings is struggling to keep up with the power players in both categories.
While still one of the top three online operators, DraftKings sits well behind BetMGM in Michigan’s online casino revenue race. It also is well behind FanDuel when it comes to online sports betting wagers and revenue.
Where DraftKings sits among Michigan online gambling sites
Michigan has three online operators that have separated themselves from the pack of the other 12. DraftKings joins FanDuel and BetMGM as the three power players in the state.
Third in online casino revenue
When it comes to Michigan online casinos, nobody can touch BetMGM Michigan.
BetMGM Michigan has over $1.2 billion in lifetime online revenue, more than double any other competitor. It alone accounts for 36.5% of the market share here in the state.
FanDuel Casino MI is second at $567.3 million (17%), while DraftKings Casino MI is a narrow third at $545.6 million (16.7%)
Second in sports betting handle, third in revenue
DraftKings Sportsbook MI has amassed $2.5 billion in online wagers since Michigan legalized online sports betting in January of 2021. That gives it 23.7% of the state’s sports betting handle market share.
FanDuel Sportsbook MI leads the way with $3.1 billion in handle (29.6%), while BetMGM Michigan is at $2.4 billion (22.6%).
Where things differ for DraftKings is in revenue. A lifetime hold of just 6.1% puts it at $151.9 million in lifetime revenue. That’s far cry from FanDuel’s $347.7 million and BetMGM’s $227 million.
DraftKings’ recent success still not at pace with top operators
The 2023 numbers for DraftKings have been positive in both categories, but still not keeping up with the lead operators.
Online casino growth not matching FanDuel
Michigan continued its online casino surge in April, posting its second-highest monthly revenue at $159.4 million.
DraftKings had $28.1 million of that amount to make up for 17.6% of the state’s market share, a nice bump up from its average of 16.7%
DraftKings has hit at least 17% of the share in four consecutive months and is up 40.3% in revenue for the first four months of 2023 when compared to 2022.
However, it’s still not closing the gap. Both BetMGM and FanDuel also are up solidly in revenue for the first third of 2023.
- BetMGM: $208.8 million, up 10.7% from 2022 ($188.6 million)
- FanDuel: $123.9 million, up 53.7% from 2022 ($80.6 million)
- DraftKings: $112.8 million, up 40.3% from 2022 ($80.4 million)
FanDuel pulling away in sports betting
The start of 2023 hasn’t been positive for many online sportsbooks in Michigan. Collectively, the state is down nearly 10% in handle over the first four months of 2023 compared to 2022.
FanDuel is one of the few operators to see online handle growth thus far in 2023, up $20.7 million.
DraftKings took just a small hit when compared to its competitors, falling only 3.3% at $13.4 million. Six different books are down at least 20%.
Where DraftKings is seeing growth this year is revenue. It is up 63% from 2022 thus far in 2023 with an added $10.8 million collected.
However, FanDuel continues to cramp their style as it has increased its revenue by $25.3 million this year.
Why is DraftKings not stronger in Michigan?
There are a few reasons as to why DraftKings’ numbers in Michigan aren’t meeting the national trend for the online operator.
First, DraftKings purchased Golden Nugget online gaming last year. So, DraftKing Inc.’s report of a 26% national iGaming market share also includes that of Golden Nugget. That accounts for about 4-5 percentage points of the total.
Here in Michigan, Golden Nugget accounts for 4.5% of the online casino market share ($150.6 million). Combined, DraftKings Inc. would have 21.2% of the overall market in the state.
Also, BetMGM is not available in Connecticut, one of the few online casino states in the country. That skews a bit for DraftKings in the overall numbers.
When it comes to sports betting, DraftKings has been able to capitalize in new markets. Most notably, DraftKings is dominant in its home base of Massachusetts, where it just captured over half of the April market share.
How is DraftKings trying to bridge the online gap?
During their 2023 Q1 investor call, DraftKings CEO Jason Robbins discussed what he felt were the strengths of the product currently.
One of the positives was its ability to bring in new customers without having to spend as many promotional dollars as it had in the past.
“We acquired 57% more first-time players year-over-year on a 27% lower cost of acquisition. So really pleased on that front,” Robbins said.
Cross-selling is a continued focus for DraftKings, as more operators are seeing customers moving from one gambling platform to the other.
“I also think that because the cross-sell is so strong between sports betting and iGaming that as we gain share in sports betting, we’re naturally going to gain some share in iGaming as well if we continue to do a good job with the cross-sell, which we have been doing. So I think that’s a big factor to consider also,” Robbins said.
When it comes to sports betting, the hold has been the big difference for DraftKings and the lead competitor of FanDuel. FanDuel is sporting an 11.2% lifetime hold in Michigan, going over 13% the last two months.
DraftKings knows that parlay betting plays into a stronger hold and has introduced live betting same game parlays for NBA and MLB. However, it doesn’t want to create unfavorable odds for customers just to see an improved hold.
“So driving hold up by increasing the take, meaning making worse odds or players is not something that I think is really being considered right now,” Robbins said. “Creating products that people want and that they retain well on and that they continue to use and get enjoyment out of is the message.”
DraftKings’ lifetime hold of 6.1% in Michigan has been surpassed each of the last two months, including 10.7% in April.