DraftKings earns US$ 1.41 billion in Q1 2025, but loses US$ 170 million as favourites dominate March Madness
DraftKings, one of the giants in the sports betting market in the United States, started 2025 on the right foot. At least at first glance. The company announced a 20% increase in its revenue in the first quarter of the year, driven by more active users and rising betting volume. But not everything was cause for celebration. The famous college tournament, March Madness, surprised— not because of underdogs, but because of the lack of them. That caused the company to lose margin and, on top of that, revise its projections for the year.
Revenue up and user base growing
Between January and March 2025, DraftKings earned US$ 1.41 billion, compared to US$ 1.175 billion in the same period last year. A huge leap, showing how the market remains strong. The number of monthly unique payers (known as MUPs) grew 28% and reached 4.3 million users. Meanwhile, the total betting volume — known in the industry as “handle” — hit US$ 13.9 billion, 16% higher than the previous year.
These figures helped improve the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation), which rose from US$ 22.3 million in 2024 to US$ 102.6 million this year. The company’s net loss also dropped significantly: from US$ 142.5 million to US$ 33.8 million.
CEO Jason Robins celebrated the results. According to him, recent improvements in products and user experience are working: “Our key indicators are strong, even with an economic scenario that remains challenging,” he stated.
When favourites win too much, the house loses
Despite the positive performance, the company had to swallow a setback caused by the success of favourite teams in the March Madness. This year, higher-ranked teams won 82% of the games. The highest rate in the history of the tournament. As a result, punters who backed the favourites profited, while bookmakers like DraftKings saw their earnings drop.
The impact was direct: a loss of around US$ 170 million in revenue and a US$ 111 million cut in EBITDA. The result? The company had to revise its annual revenue forecast downward, now ranging from US$ 6.2 billion to US$ 6.4 billion (previously US$ 6.3 billion to US$ 6.6 billion). The adjusted operating profit estimate also fell, now between US$ 800 million and US$ 900 million.
“Our performance was looking great until March Madness arrived,” said Robins, with a tone of frustration. He assured, however, that the volatility was temporary and that the company is analysing data to better understand the variations between expected and actual profits.
Strategies for the future: AI, micro-bets and expansion
Even with this stumble, DraftKings isn’t standing still. The company continues to invest heavily in innovation, especially in technologies based on artificial intelligence. One of the current focuses is so-called “micro-betting”, where players can bet on specific events within a game, such as who will take the next corner or whether the next pitch in baseball will be a strike. This type of bet already represents 36% of betting volume in baseball games, for example.
Another strategic point is geographic expansion. Today, DraftKings’ betting platform is active in 25 American states and Washington, D.C., reaching around 49% of the US population. Additionally, the iGaming operation (online casino) is running in five states and also in Ontario, Canada. And the news doesn’t stop: in Missouri, voters recently approved the legalisation of sports betting, and a launch there is already being planned.
The company also keeps its financial health in check. In the first quarter, DraftKings repurchased 3.7 million shares — a sign of confidence in its own performance. And even with regulatory challenges, such as tax hikes in Maryland and exiting the Texas and New Mexico markets (which had a US$ 30 million impact on revenue), the company remains strong.
The game goes on
At the end of the day, DraftKings shows that even when the favourites dominate and turn the tables on the house, there’s room for recovery and growth. With a growing user base, more sophisticated products, and a long-term strategy supported by technology, the company continues to bet on the future of the market.
This article was first published in Portuguese on 12 May 2025.
