So, draftkings and fanduel have BOTH found a way to not turn a profit on a sports book. I understand it's more complex than that, but cmon. They both are probably unable to offload action, but the players prepay. No risk on collecting either. That leaves 2 companies inept at keeping enough lines right to profit on the spread, and even worse with parlays. Books don't go broke on parlays. That shouldn't happen. Fanduel has multiple TV channels 24/7. Not sure about draftkings. I know money has been leaving the stock since June.
Can someone explain how something legal in person in Vegas is profitable, but not online. Is the business model just a bust due to ungodly liquidity required, or would expected rate cuts through the end of the year change the direction?
Posted by Gemaneye
7 Comments
They probably spend way too much on advertising.
Bc they’re spending more money than they make. The OpEx is insane; look at the amount of marketing and advertising they’re doing. Wtf is Draft Kings Network? Maybe they’ll eventually be profitable but right now is its spend & grow mode.
The goal isn’t profit, its revenue. They operate in debt which does have advantages with taxes. Hard to believe but profit isn’t always the goal, revenue to cover expenses and growth is.
they’re advertising like crazy, offering all kinds of incentives for first bets. They’re probably betting that enough people get addicted to gambling that they make money later on.
Fanduel parent company Flutter is profitable.
The client acquisition costs are very high in sports betting. They spend WAY too much on advertising
So, would rate cuts change anything?