We expect to go live in Ontario in the near future, pending licensure and regulatory approval. DraftKings said it plans to launch its sportsbook and online casino in Ontario in the second quarter but could be live in the province as early as the end of the month.
That’s according to CEO Jason Robins and CFO David Park, who spoke about DraftKing Ontario’s long-anticipated launch in the province during an earnings call on Friday to discuss Q1 2022.
“We expect to go live in Ontario in the near future, pending licensure and regulatory approval,” Robins said during the call. “Due to the presence of grey market operators, many of which have been present in Ontario for several years, we do not believe that the timing of our launch will have any impact on the share we are able to achieve in that province.”
CFO Outlines Effects of GNOG Acquisition, Ontario Launch
Park said DraftKings expects the combination of its acquisition of Golden Nugget Online Gaming (GNOG), which was completed the day before the earnings call, and the launch in Ontario to contribute between $130 million to $150 million in revenue for the full-year 2022, while also creating a loss of between $50 million and $70 million in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
For Q2 2022, the CFO said the company expects the GNOG acquisition and the Ontario launch to add between $20 million and $25 million in revenue. Adjusted EBITDA for the quarter will decline between $35 million and $45 million, “assuming Ontario launches in May,” Park said.
During the Q&A portion of the call, Robins said the numbers show DraftKings was becoming more cost-efficient.
“When you take the most conservative end of our guidance, we’re still better with our new guidance plus those impacts than we were last quarter,” Robins said. “It’s great to see that some of the cost efficiencies that we’re identifying are able to effectively fund new state — or, in this case, province — launches, as well as the absorption of an acquisition. We’re going to continue to look for ways to try to neutralize the impact of new state launches through identification of further cost efficiencies up and down the business.”
Revenue Guidance Raised Despite Quarterly Loss
DraftKings reported revenue of $417.2 million in Q1 2022, up 33.6% from the same quarter one year ago ($312.3 million). But it also reported a wider net loss year-over_year. The company reported a net loss of $467.7 million in Q1 2022, compared to $346.3 million in Q1 2021.
Despite the loss, DraftKings was bullish over how the rest of the year would sort out. The company raised the midpoint of its revenue guidance for 2022 — to $1.975 billion, up from $1.925 billion — but said the move did not include any contribution from its upcoming launch in Ontario or its acquisition of GNOG.
The operator also reported that it had 2 million monthly unique paying customers in Q1 2022, up 29% from the year-ago quarter.
DraftKings Quiet on Ontario Plans
DraftKings has mostly been silent on its plans to launch in Ontario.
Robins and Park both mentioned the launch during the company’s Q4 and full-year 2021 earnings call on February 18. At the time, Park said the company projects that it will be profitable by Q4 2023, in part from a successful launch in Ontario.
In April, a website for a provincial agency, iGaming Ontario (iGO), briefly posted a list of operators with pending applications for an internet gaming license. DraftKings was one of the operators listed. It showed that the company was in the process of securing licensure with the Alcohol and Gaming Commission of Ontario (AGCO) and concluding an operating agreement with the iGO — both prerequisites for an operator offering online poker, casino gaming, or sports betting in Ontario.