Sports Betting’s $25 Billion Future: How DraftKings Is Dominating the Market

It seems like right now is a good time to bet on sports betting companies. More than half of the U.S. states have opened their doors to sports betting by legalizing it in one form or the other. This has quite really opened floodgates for companies engaged in the segment, including today’s main star, DraftKings Inc. (NASDAQ:DKNG).

The company is harvesting sweet fruits from all corners, be it profitability, stock performance, diversification, or growth.

The company stock has soared almost 24% over the past six months and is currently tracking better than its industry peers like MGM Resorts International (NYSE:MGM) and Churchill Downs Incorporated (NASDAQ:CHDN). Year-to-date performance is also worth mentioning because it has surged at 16.7%. DKNG is currently trading at a price-to-sales multiple of 3.13x, giving a sight of a reasonable stock price.

Key Points

• With sports betting now legal in 38+ states, DraftKings with a 28% market share has a bright future.

• Q4 2024 revenue rose 13% YoY and management raised 2025 revenue guidance to $6.3–$6.6B.

• The U.S. sports betting market is set to grow to $25B by 2029. 

The Next Big Thing In The Future Of Sports Betting

After operating in hush-hush for years and decades, sports betting is finally turning mainstream in the U.S. This is because of the federal ban lifted in 2018, which marked a tectonic shift.

The activity, which was strictly prohibited in all the states, is now open in over 38 states and Washington, D.C. U.S. states are independent to self-regulate the activities and operations of sports betting, resulting in a still budding, yet major market with consumers across a wide age group.

Many big companies quickly stepped in to get the first scoop of the new pie, and their haste has borne fruit. In the race, DraftKings sprinted to a lead but investing in it is a whole other ball game, so is it worth it?

Can You Invest In Sports Betting?

You can invest in sports betting via DraftKings, which trades under the ticker symbol DKNG.

DraftKings has significant advantages in the current market. At the tip is the unlimited growth potential of the sports betting market. The market is still emerging and blooming with maturity likely not going to be evident for for a long, long time. Consumers are still just trying their hands on sports betting in many states and still trying to understand different facets of it. As a result, DraftKings has a broad customer base still to reach.

DraftKings has cornered a substantial 28% of the market share in the sportsbook market. This market leadership has allowed it to achieve persistent revenue growth in recent quarters. Also, the company’s presence and growth in different states is cementing its market standing.

Last year, DKNG launched its online sportsbook in Washington D.C. As of the end of fiscal year 2024, DraftKings went live with mobile sports betting in 25 states and Washington, D.C., collectively representing around 49% of the U.S. population. It is also live with iGaming in 5 states, representing 11% of the U.S. population.

The company’s plans to be the go-to sportsbook in every possible state and doesn’t appear to be not slowing anytime soon. It’s clear management is cautious about not putting all of their eggs in a single basket and attempting to go everywhere that’s legal, quickly.

While capitalizing on the early-stage sports betting industry, DraftKings is also leveraging the wide suite of its offerings in the form of cross-selling between its products. Plus, it is pivoting into the digital lottery, iGaming, and online casinos to stay ahead with technology and ongoing innovations.

What Do the Numbers Say?

It seems the company’s most recent quarter reports have also made investors optimistic. Management reported financial results for the fourth quarter of 2024, which ended December 31, 2024. The quarterly revenue saw a strong 13% growth from the prior year’s quarter to $1.39 billion, largely driven by customer engagement, acquisition, and expanding operations.

The company’s adjusted EBITDA for the quarter was $89.45 million. For the full year 2024, the leadership team delivered an impressive $181.31 million in adjusted EBITDA compared to a negative value of $ 151.03 million in the prior year.

Further, DKNG’s adjusted earnings per share of $0.14 for the quarter was in line with the street expectations.

What stood out for the market participants was DraftKings’ fiscal year 2025 guidance. The company raised the midpoint of its fiscal year 2025 revenue guidance. It now expects revenue in the range of $6.30 billion to $6.60 billion, compared to its previous guidance of $6.20 billion to $6.60 billion.

Where is DraftKings Headed in the Market?

From the recent reports, stats, and market outlooks, one thing is clear: the sports betting market is just spreading its wings and the best is yet be to come, at least financially. DKNG is definitely among the early birds that have been with the sports betting market from the start and enjoys a leading market share and growing moat.

Consumer retention, acquisition, and performance are all on the rise and together have significantly contributed to growth. Also, as DKNG extends its gaming platforms and launches new services in fresh regions and locations, expect the top line to grow in tandem.

Further, the revenue of the U.S. sports betting market is projected to reach around $18.51 billion in 2025 and expand at a CAGR of 7.9% to grow to $25.08 billion by 2029. With such encouraging market growth possibilities, DKNG should face tailwinds.

Analysts are largely bullish on DraftKings and the consensus view is that DKNG is a Buy according to 22 analysts. Better yet, not a single Sell rating exists on the stock and upside to fair value of $57.66 signifies a 33.1% opportunity.