It’s been a good year for online gambling.
Take DraftKings, for example.
One of the power online operators for Michigan online casinos and sportsbooks has seen its stock make a dramatic rise for the year thus far.
With an increase over 180% since the start of 2023, DraftKings is on its way to rebounding from a big decline dating back to 2021.
Where does DraftKings’ impact in Michigan play into their stock rise?
DraftKings casino second nationally, third in Michigan
Online casino revenue numbers are a little tricky when compared to sports betting.
In other top iGaming states like Pennsylvania and New Jersey, retail casinos have multiple online license agreements, which allows them to operate different brands to combine for their revenue totals.
In Michigan, each retail casino has one licensed partner for online casinos and online sportsbooks.
What we do know is that BetMGM and DraftKings have established themselves as the top two online casinos nationwide. The two combine for more than half of the online revenue market across the country, with BetMGM estimated at over 30%.
BetMGM Michigan dominates this state with 36.3% of the lifetime share. DraftKings Casino MI is actually third, behind FanDuel Casino (17.2%) at 16.5%.
The good news for DraftKings is that it has climbed up to 17.8% of the share in 2023 through May. However, FanDuel is also up, moving to 19.6%. While BetMGM has dropped to 32.7% for the year, there’s still a very distant gap between the leader and its two competitors.
DraftKings sportsbook still looking up to FanDuel
DraftKings is certainly one of the top names in sports betting, but has struggled to overcome FanDuel in most states.
Nationally, DraftKings makes up about 32% of the online market share. While an improvement from just under 28% a year ago, it’s still well behind FanDuel, which has about 45% of the nation’s online sports betting market.
DraftKings Sportsbook has 25.7% of the Michigan online sports betting market share for 2023, while FanDuel Sportsbook has 34.5%.
Comparatively, in New York, DraftKings holds 34.5% of the online market share for 2023. That’s second to FanDuel (40.2%). However, DraftKings had a strong June, posting market-leading weeks for the majority of the month. It bested FanDuel $488.5 million in handle to $418.2 million for the month.
Similarly, in Illinois, DraftKings plays second fiddle to FanDuel in online handle. However, the two combine to make up 66.4% of the state’s online market share.
DraftKings capitalizing on new markets, stronger holds
As more states continue to add online sports betting, DraftKings has been able to establish itself early as a top online option along with FanDuel, while also showing solid hold numbers.
DraftKings sits a clear No. 1 in its home base of Massachusetts. It has nearly 50% of the market share in the state while posting a 9.7% hold.
In Maryland and Ohio, DraftKings is second to FanDuel in both instances. However, in both states, DraftKings has a hold of 12% or higher.
Michigan bettors have seen better success with DraftKings, posting a hold of 7.5% for 2023 through the first five months. The lifetime hold for DraftKings in the state is just 6.2%.
DraftKings stock rise in 2023 making up for previous drop
At the end of Tuesday, July 18, DraftKings stock ($DKNG) sat at $31.29.
To begin 2023, the stock was at $11.05, the lowest it had been since 2019.
DraftKings hit its stride from 2019 to 2021, climbing up to a peak stock value of $71.98 in March of 2021.
From there, the climb was about as sharp as the fall.
Now, the increase from $11.05 to $31.29 is a jump of 183.2%.
Outperforming expectations is raising DraftKings stock
Back in February, DraftKings reported it was exceeding revenue expectations at the time and raised its overall outlook for 2023.
That helped spark an immediate surge of their stock at the time.
Touting being the most downloaded sportsbook app on Super Bowl Sunday, DraftKings continued to build off that success in the months to come.
In May, for its Q1 earnings report, DraftKings again reported better-than-expected results. It also again expanded its overall outlook for 2023, targeting a 40-44% growth from 2022 revenue.
How can DraftKings continue to raise its stock?
DraftKings appears to have found a nice little business groove for itself.
The addition of new online sportsbook markets is always helpful. That can be a continued source of improved business as Kentucky is set to launch in September and North Carolina and Vermont are anticipating early 2024 launches.
DraftKings knows its launch approach and has been able to establish a strong consumer base right from the start.
At some point the sports betting launch market will begin to run dry. As states begin to turn to legalizing online casinos, that is where DraftKings can really show its mettle.
Online casino revenue far outweighs online sports betting revenue for operators. If done well, it can be a huge launching pad for business.
Unfortunately, progress for new online casinos states is pushed back to 2024 as states struggle with finding legislation agreements. Rhode Island appears to be next to bring legalized iGaming, but that won’t be until early 2024.
DraftKings seems to have acknowledged its position as a second-place online franchise behind FanDuel in sports betting and BetMGM in online casinos.
There’s nothing wrong with that.
Second is still a pretty good place to be in an industry that is still very much in an infancy stage.
