DraftKings is dealing with the results of a historic March Madness for customers.
The Boston-based sports betting and fantasy giant released its Q1 2025 earnings results on Friday with the company closing the quarter with $1.4 billion in revenue, a 20% increase year-over-year. DraftKings attributed the revenue growth to the acquisition of new customers and the impact of its acquisition of Jackpocket in a deal valued at $750 million.
DraftKings reported favorable revenue growth in Q1 2025 but dealt with heavy customer wins in the quarter due to March Madness. This year’s edition of the annual tournament saw all four No. 1 seeds reach the Final Four—the second time in the competition’s history.
“We acknowledge that customer-friendly sports outcomes have impacted recent quarters and are continuously analyzing our data, including historical performance by bet type to fully understand the gap between our structural and actual hold percentage,” said DraftKings CEO Jason Robbins during the company’s quarterly earnings call.
DraftKings reported a hold percentage of 9.5% in Q1 2025 between a favorable Super Bowl LIX and a customer-friendly March Madness. The company’s structural sportsbook hold percentage closed at 10.4% during the quarter.
“This past quarter was looking great until March Madness,” continued Robbins. “We have analyzed, as we always do, everything thoroughly, and we are 100% confident that these are random outcomes.”
DraftKings reported a total sportsbook handle of $13.9 billion in Q1 2025, a 16% increase compared to the same month last year aligning with expectations due to March Madness.
In the year-to-date, customer-friendly outcomes in FY2025 are projected to have a headwind of $170 million to DraftKings’ revenue and $111 million to adjusted EBITDA.
The company will also be impacted by Maryland’s tax increase on sports wagering and the shuttering of its Jackpocket operations in Texas due to a ban on online lottery couriers.
DraftKings projects Maryland’s tax increase and the shuttering of its courier services in Texas and New Mexico to have a combined headwind of $30 million to revenue and $26 million to adjusted EBITDA.
Financial projections for DraftKings
DraftKings has lowered its full-year revenue target behind its Q1 results. In FY2025, it projects revenue to range between $6.2 billion to $6.4 billion. Its previous guidance expected full-year revenue to range between $6.3 billion and $6.6 billion. DraftKings also revised its adjusted EBITDA guidance to be between $800 million and $900 million.
Its previous guidance projected an adjusted EBITDA of between $900 million and $1 billion.
DraftKings closed Q1 2025 with market access for online sports betting in 25 states and Washington, D.C. Its online casino operations are also available in five U.S. markets.
In Q1 2025, DraftKings reported 4.3 million average monthly unique paying customers—a 28% uptick year-over-year. The company anticipates an increase in average monthly unique paying customers behind the looming launch of online sports wagering in Missouri.
Its net losses from operations in Q1 2025 reached $33.8 million. By comparison, net losses in Q1 2024 closed at $142.5 million. DraftKings saw its adjusted EBITDA in Q1 2025 reach $102.6 million. In Q1 2024, DraftKings reported an adjusted EBITDA of $22.3 million.
As of March 31, 2025, DraftKings’ cash and cash equivalents were $1.1 billion.
