DraftKings Eyes Expansion Into New Markets as It Balances Growth, User Acquisition

Customer acquisition and its associated costs remain a double-edged sword for officials at DraftKings, according to co-founder and CEO Jason Robins.

Third-quarter results released Thursday (Nov. 7) revealed a 39% increase in revenue to $1.1 billion, fueled by the return of the NFL season. Customer acquisition costs were reduced by 20%. Monthly unique payers (MUPs) rose 55% to 3.6 million average monthly unique paying customers in the third quarter. Additionally, newly acquired online sportsbook and iGaming customers increased 14%.

“We had unexpectedly strong customer acquisition, which bodes well,” Robins told analysts Friday (Nov. 8) during the earnings call. “Because customer acquisition is hard to predict from a cost perspective, we approach it cautiously.”

As the company expands in the competitive sports betting and iGaming markets, including the acquisition of Jackpocket, acquiring new users and controlling customer acquisition costs are challenging balanced against promotional spending costs.

“We achieved healthy results across our core value drivers in the third quarter with efficient customer acquisition and promotional reinvestment as well as improvement in our structural sportsbook hold percentage,” Chief Financial Officer Alan Ellingson said.

Despite overall revenue growth, the company recorded a net income loss of $293.7 million, with costs rising 36.7% to $742.4 million. DraftKings also revised its annual guidance downward due to favorable NFL outcomes early in Q4, which impacted short-term earnings.

While growth among MUPs was considerable, average revenue per MUP declined 10%, to $103, largely due to Jackpocket customers, who have different spending patterns. Excluding the impact of Jackpocket, that figure rose 8%.

DraftKings’ cautious approach to customer acquisition costs reflects the volatility of the sports betting market, Robins noted. While the company’s promotional strategies have been effective, he said, the customer acquisition environment remains unpredictable. In high-tax states like New York and Illinois, where competition is fierce, DraftKings has refined its promotional strategies to target lower-value customers more efficiently.

DraftKings’ growth is also driven by its continued geographic expansion. The company currently operates in 25 U.S. states and Washington, D.C., covering nearly 50% of the U.S. population. In addition to its mobile sports betting footprint, DraftKings also operates iGaming in five states, reaching 11% of the U.S. population. The company is preparing to launch in Missouri and Puerto Rico once regulatory approvals are secured, further broadening its reach.

Beyond new states, DraftKings is exploring new revenue opportunities. Company officials see potential in event-driven activations, such as special promotions around major sporting events like the NFL playoffs or NBA season. These initiatives are designed to reactivate dormant customers and increase engagement during peak periods.

“This fall, we launched new and exclusive NBA markets specifically designed to engage customers with key game storylines,” Robins said. “We also expanded our in-house Same Game Parlay offering to more than 50 new NBA markets.”

While DraftKings is optimistic regarding growth in 2025, the company faces challenges in the form of rising competition and the unpredictability of customer acquisition costs, Robins noted. The company’s ability to sustain its growth will depend on managing promotional spending efficiently while continuing to attract and retain high-value customers.

“We always try and re-activate stagnant customers through always-on tactics,” Robins said. “We can trigger different CRM and retargeting treatments, and the other vector is more seasonal around event-driven activation. How can you use those moments to get additional reactivation? We try and use those big moments to gain activations.”

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