DraftKings Inc. is coming off a successful Q1 for 2023, according to their latest investor call. The company touted having the top iGaming market share in the United States at 26% for the first quarter of 2023, while the online gambling market continues to compete for the top spot nationally.
However, in Michigan, DraftKings is struggling to keep up with the power players in both categories. While still one of the top three online operators, DraftKings sits well behind BetMGM in Michigan’s online casino revenue race. It is also lagging behind FanDuel in terms of online gambling wagers and revenue.
Where DraftKings stands among Michigan online gambling sites
Michigan has three online operators that have separated themselves from the rest of the pack. DraftKings joins FanDuel and BetMGM as the three power players in the state.
Third in online casino revenue
When it comes to Michigan online casinos, no one can touch BetMGM Michigan. BetMGM Michigan has generated over $1.2 billion in lifetime online revenue, more than double any other competitor. It alone accounts for 36.5% of the market share in the state. FanDuel Casino MI is second at $567.3 million (17%), while DraftKings Casino MI is a close third at $545.6 million (16.7%).
Second inside sports betting deal with, third inside revenue
DraftKings Sportsbook MI has amassed $2.5 billion in online wagers since Michigan legalized online gambling in January of 2021. That gives it 23.7% of the state’s gambling handle market.
FanDuel Sportsbook MI leads the industry with $3.1 billion in handle (29.6%), while BetMGM Michigan is at $2.4 billion (22.6%).
Where things differ for DraftKings is in revenue. A lifetime hold of just 6.1% translates to $151.9 million in lifetime revenue. That’s a far cry from FanDuel’s $347.8 million and BetMGM’s $227 million.
DraftKing’s recent success still falls behind the top operators.
The 2023 numbers for DraftKing’s search are positive in both categories, but nevertheless do not verify top performers.
Online casino growth not matching FanDuel.
Michigan continued its online casino surge in April, posting its second-highest monthly revenue at $159.4 million.
DraftKings had $28.1 million of that to account for 17.6% of the state’s market share, a nice bump up from the average of 16.7%.
DraftKings has hit at least 17% of that share in four consecutive months and is up 30.3% in revenue for the first four months of 2023 compared to 2022.
However, it’s still not closing the gap. Both BetMGM and FanDuel are also up steadily in revenue for the first third of 2023.
- BetMGM: $208.8 million, up 12.7% from 2022 ($188.6 million)
- FanDuel: $123.9 million, up 53.7% from 2022 ($80.6 million)
- DraftKings: $112.8 million, up 30.3% from 2022 ($80.4 million).
FanDuel pulling aside in gambling
The start of 2023 hasn’t been favorable for many online sportsbooks in Michigan. Overall, the state is down almost 10% in handle in the first four months of 2023 compared to 2022.
FanDuel is one of the few operators to see online handle growth so far in 2023, up $20.7 million.
DraftKings took just a slight hit compared to its competitors, falling only 3.3% at $13.4 million. Six other books are down by at least 20%.
Where DraftKings is seeing growth this year is in revenue. It’s up 63% from 2022 so far in 2023 with an additional $10.8 million collected.
However, FanDuel continues to cramp their style as it has increased its revenue by $25.3 million this year.
Why is DraftKings not tougher in The state of michigan?
There are a few factors as to why DraftKings’ numbers in Michigan aren’t meeting the national trend for the online operator.
First, DraftKings acquired Golden Nugget online gaming last year. So, DraftKings Inc.’s share of a 26% national iGaming market includes that of Golden Nugget, which accounts for about 4-5 percentage points of the total.
Here in Michigan, Golden Nugget accounts for 4.5% of the online casino market ($150.6 million). Combined, DraftKings Inc. would have 21.2% of the overall market in the state.
Additionally, BetMGM is not available in Connecticut, one of the few online casino states in the country. This skews the numbers a bit for DraftKings in the overall picture.
When it comes to sports betting, DraftKings has been able to capitalize on new markets. Most notably, DraftKings is dominant in its home base of Massachusetts, where it captured over half of the April business.
How is DraftKings trying to connection the online distance?
During their 2023 Q1 investor call, DraftKings CEO Jason Robbins discussed what he felt were the strengths of the product currently.
One of the positives mentioned was its ability to attract new customers without having to spend as much on marketing as in the past.
“We acquired 58% more new players year-over-year at a 27% lower cost of acquisition. So, we’re really excited about that front,” Robbins said.
Cross-selling is also a continued focus for DraftKings, as more players are seen moving from one gambling platform to the other.
“I also believe that because the cross-sell is so strong between gambling and iGaming, that as we gain share in gambling, we’re naturally going to gain some share in iGaming as well if we continue to do a good job with the cross-sell, which we have been doing. So, I think that’s a significant factor to consider as well,” Robbins said.
When it comes to gambling, the hold has been the major difference between DraftKings and its main competitor, FanDuel. FanDuel has had a 10.2% lifetime hold in Michigan, reaching 13% in the last two months.
DraftKings recognizes that parlay betting contributes to a stronger hold and has introduced live betting same game parlays for NBA and MLB. However, the company doesn’t want to create unfavorable odds for customers just to achieve a higher hold.
“So, driving hold up by increasing the take, which means making worse odds for players, is not something that I think is really being considered right now,” Robbins said. “Creating products that people want and that they engage with well and that they derive enjoyment out of is the message.”
DraftKings’ lifetime hold of 6.1% in Michigan has been surpassed in each of the last two months, reaching 12.7% in April.
Drew Ellis is the chief writer for PlayMichigan, the only source of online gambling reporting in Michigan. Ellis is a permanent resident of the state and has worked in several media outlets since 1998, including more than a decade in the sports betting sector, before moving to the US ALL casino market in 2020.
