DraftKings' Q1 2025 Earnings: Unpacking Contradictions in Promotional Strategy, Tax Impacts, and iGaming Growth

Promotional intensity and structural hold trends, tax increases and state budget process, promotional efficiency and customer acquisition, structural hold expectations, iGaming growth and performance are the key contradictions discussed in DraftKings' latest 2025Q1 earnings call.



Revenue and EBITDA Growth:
- DraftKings Inc. reported revenue of $1.409 billion for Q1 2025, representing 20% year-over-year growth.
- The growth was driven by strong performance in sports book handle and improved efficiency in promotional spending.
- Adjusted EBITDA for the quarter stood at $103 million.

Impact of Customer-Friendly Sport Outcomes:
- Despite strong core value drivers, DraftKings experienced a decrease in actual sports book hold percentage to 9.5% due to favorable Super Bowl and customer-friendly NCAA basketball tournament outcomes.
- This resulted in a hold percentage gap, but the company remains confident that recent volatility is random.

Structural Sports Book Hold Percentage Increase:
- DraftKings achieved a structural sports book hold percentage of 10.4%, an increase of 50 basis points year-over-year.
- This improvement was driven by an increase in parlay handle mix, which rose by 370 basis points year-over-year.

Live Betting and Product Enhancements:
- Live betting accounted for greater than 50% of total handle in Q1, marking a significant increase.
- Investments in live betting capabilities, such as the acquisition of SimpleBet, contributed to this growth.