DraftKings is launching a new prop-style betting product, one that closely resembles the offerings of smaller fantasy gaming companies that it is currently feuding with—both in public statements, and in statehouses around the country.
During its Investor Day on Tuesday, DraftKings announced a new betting product called “Progressive Parlay,” which will allow customers to easily make over/under prop picks against the house. It will look familiar to users of apps such as PrizePicks and Underdog Fantasy, a class of fantasy companies that are increasingly at odds with the regulated betting establishment, which claims they are operating outside the law.
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The feud has grown more intense in recent months, as those companies show sizeable growth in popularity and revenue. In Arizona, for example, PrizePicks had $28.2 million in entry fees this year through August, vastly outpacing fantasy products at DraftKings ($14.6 million) and FanDuel ($3.4 million). By comparison, both DraftKings and FanDuel reported $115 million in mobile wagers in August alone.
While those fantasy numbers may look small, it’s caught the attention of betting executives and investors. Success from the smaller fantasy companies has likely been two-fold: 1. an effective product/user experience; and 2. their willingness to offer those products in states like California and Texas, which have huge populations and no legal sports betting. Imagine those Arizona fantasy numbers, just larger, but with $0 in handle from regulated sports betting.
The new DraftKings product is a potential answer for No. 1, but not No. 2. Visually, the product appears and functions similar to those other apps, allowing bettors to quickly and simply build a parlay card and still win money if some of those bets lose. However, it will be regulated as sports betting, so it won’t be available in those fantasy-only states. A specific launch date has not been set.
DraftKings CEO Jason Robins said during the Investor Day presentation that he was unaware of any product like it, particularly among those offered by the largest sportsbooks. He added that Progressive Parlay is what he calls a “win-win,” meaning he expects that customers will enjoy it and the company will reap higher margins off it.
“Those are the types of things we’re focused on,” he said. “The customer likes it, but also, there are so many of those products that can be great financial drivers for DraftKings.”
The established operators claim that those specific prop products are gambling, and should be regulated accordingly. They’re also lobbying state legislators to take action. The fantasy operators disagree, and have highlighted the hypocrisy they see in the public and private actions of DraftKings and FanDuel, which were once upstart fantasy operators themselves, often moving quickly into legal grey areas to the chagrin of more entrenched incumbents.
In addition to the new product, DraftKings’ Investor Day presentation included new guidance and new insight into the company’s path toward profitability. In the past, company executives said they expected each new state to reach “contribution profitable” over a three-year period, occurring gradually as customer acquisition costs dip and the user base grows.
However, DraftKings said it now projects new states could reach that point in as little as five quarters. Why? Bettors in those states are primed for launch in a way that they weren’t in earlier years. That’s made DraftKings more effective at acquiring customers. CFO Jason Park said that in states where DraftKings launched in 2022 and 2023, it is adding customers 4.5 times faster than it was in states where it launched in 2018 and 2019.
“Put simply, more recent states have citizens that are geared up and ready to go when their state finally launches online sports betting,” Park said.
The company also provided revenue estimates for the future, based solely off states with existing legal betting. Those estimates are $4.7 billion in 2024, $6.2 billion in 2026 and $7.1 billion in 2028.
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