DraftKings and the push to legalize sports betting
Shawn Baldwin, CNBC.com producer
Sports betting in the U.S. is booming. During the 2021 NFL season an estimated 45 million Americans are expected to wager at least $12 billion. Since a 2018 Supreme Court ruling, sports betting is now legal in more than 30 states.
David Katz, Managing Director, Jefferies
This is that next frontier that the gaming industry has been looking for, for many years.
Bill Miller, President and CEO, American Gaming Association
We've seen just massive, massive levels of engagement, from the perspective of people that are excited about being able to add this component to their viewing experience, whether it's in person or at home in places where you have mobile betting.
A flood of new customers eager for excitement and risk has made DraftKings one of the nation's biggest sportsbooks. The company has live online sports betting in 15 states and its iGaming casino segment, which includes blackjack, roulette and slots, is available in five states.
DraftKings, CEO, Jason Robins
I think right now we're in the very early innings of the industry the company's revenue is almost doubling year over year per our latest guidance. We're still live in states that on average have been live a little over a year, I think about a year and a half, still most of the population left to legalize. And we're talking about a TAM that could be $60 billion plus if there was full legalization.
In the third quarter of 2021 DraftKings revenue rose 60% from the year prior to $213 million. During that same period with mobile betting launching in several states the number of its monthly unique paying customers rose 31% to 1.3 million.
And the online sports betting and gaming industry in the U.S. is just starting to grow. As of 2021 only 4% of gross gaming revenue in the U.S. was generated online compared with 45% in a more mature market like the UK. The online sports betting market in the U.S. is expected to be worth nearly $40 billion by 2033.
But critics argue that greater access to mobile sports betting could lead to an increase in gambling addiction. The National Council of Problem Gambling estimates the cost of obsessive gambling in the U.S. is already $7 billion annually, including fees related to the justice system, healthcare, job loss and bankruptcy.
So what does the future look like for legal sports betting in America and what challenges lie ahead for sports betting providers like BetMGM, FanDuel and DraftKings.