Did DraftKings benefit from the sunset of the on-site sportsbook registration requirement in Iowa?
Consider this statement from DraftKings senior communications associate Remington Parker:
“On Jan. 1, 2021, DraftKings began mobile registration in Iowa … by 3 p.m. EST on Jan. 5, DraftKings registered more customers via mobile registration than through the entirety of 2020.”
Iowa sports betting market matures
With nearly $940 billion wagered since the legalization of Iowa sports betting in August 2019, the market has evolved considerably.
Iowa lawmakers took the phased-in approach to legal sports betting by initially requiring in-person registration for 18 months. However, the state’s low tax rate and allowance of multiple skins maintains a market that’s ripe for further growth.
At first, bettors in the state had to find casinos with a sportsbook, then travel to register in person. Thankfully for existing operators — including FanDuel and DraftKings — that all changed on Jan. 1.
Iowa Racing and Gaming Commission (IRGC) saw a wave of additional sportsbooks want to enter Iowa’s market as online registration became possible.
IRGC administrator Brian Ohorilko said the number of Iowa sportsbooks almost doubled in December 2020 and January 2021:
“What we witnessed was marketing really ramping up to levels that we had not seen before in this state. Specifically, the online sports companies are advertising with media outlets all over the state because the remote registration was available Jan. 1. Every corner of the state was in play from a marketing standpoint.”
Early Iowa losses didn’t worry DraftKings
On-site registration gave William Hill Sportsbook and its six retail sportsbooks, the advantage. However, the 2021 sunset of that rule allowed DraftKings to surge into the lead as one of Iowa’s top sportsbooks.
The state’s success was noted Friday when DraftKings reported fourth-quarter and full-year 2020 financial results from Boston.
DraftKings launched its live sportsbook app in Iowa in February 2020 and reported a $74 million first-quarter net loss in May of that year. As PlayIA reported at the time, DraftKings was operating in five new jurisdictions, including Iowa, which meant substantially more sales and marketing expenses.
A surge to end 2020
For the final three months of 2020, DraftKings reported revenue of $322 million. That’s an increase of 146% compared to $131 million during the same period in 2019.
DraftKings’ co-founder, CEO and board chairman Jason Robins explained the national landscape to investors:
“With a favorable fourth quarter sports calendar and strong marketing execution, DraftKings was able to generate tremendous customer acquisition and engagement. That propelled us to $322 million in fourth quarter revenue, a 98% year-over-year increase. In the fourth quarter of 2020, we saw MUPs (Monthly Unique Players) increase 44% to 1.5 million and (Average Revenue Per) MUP increase 55% to $65. We are raising our revenue outlook for 2021 due to our expectation for continued growth, the outperformance of our core business and newly launched states that were not included in our previous guidance.”
Robins’ company on Friday raised its 2021 revenue guidance. The previous range was $750 million-$850 million. DraftKings now anticipates $900 million to $1 billion in revenue.
Friday’s financial report also said:
“In 2021, 19 state legislatures have introduced legislation to legalize online sports betting. Five state legislatures have introduced legislation to expand their existing sports wagering frameworks. And, one state legislature has introduced legislation to legalize sports betting limited to retail locations. In addition, four states have introduced iGaming legislation and two states have introduced online poker legislation.”