I’m an avid sports fan, so I’ve been aware of the workings of sports betting for quite some time (for better or worse). However, sports betting has officially gone mainstream, and even casual fans are beginning to try their hand at it.
Whether sports betting will have a net positive effect on the sports industry and society as a whole is a topic of debate, but one thing’s for sure: The industry has solidified itself as a major force, and DraftKings (NASDAQ: DKNG) is one of its main players.
Since its IPO in July 2019, the company and its shareholders have experienced a roller-coaster ride. In March 2021, its share price peaked at close to $72, but it has since dropped to around $42.50 as of Feb. 26, 2025. That’s not ideal if you invested near its peak, but the stock is positioned to be a good long-term investment.
As of the end of 2024, 38 states and Washington, D.C., had legalized sports betting in some form. Just a few years ago, the number of potential target states for the gambling industry sat well below that. That’s partly why I’m encouraged by DraftKings’ growth potential.
Since the U.S. Supreme Court allowed states to self-regulate sports betting in May 2018, they have slowly but surely begun legalizing and making billions from the industry.
California and Texas — the country’s two most populous states — have notably not legalized sports betting yet. Together, they’re home to over 52 million adults. Of course, not all of those adults are interested in sports betting (or sports in general), but it shows how many potential customers there are just by increased legalization.
Regardless of when additional states legalize sports betting, DraftKings has done well monetizing its current customers. In 2024, it made $4.77 billion in revenue, up from $3.67 billion in 2023.
Perhaps more notable, though, is that DraftKings achieved its first full year of positive free cash flow and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024.
Its $181 million in adjusted EBITDA is a nice turnaround from the $151 million it lost in 2023 and should be a sign that the company has turned the corner on profitability.
DraftKings made its mark by being one of the leaders in sports betting, but the company has since expanded outside of that, venturing into iGaming, digital lottery, and online casinos. Venturing into different avenues expands DraftKings’ revenue streams as well as gives the company a chance to cross-sell between its products.
