DraftKings Cuts 2025 Outlook After March Madness Boosts Favorable Wins

DraftKings reported first-quarter 2025 revenue of $1.41 billion, a 20% increase year-over-year, but missed Wall Street expectations and lowered its full-year guidance for revenue and adjusted EBITDA due to unusually favorable sports outcomes during the NCAA March Madness tournament. CEO Jason Robins explained that the record high win rate of favorites (82%) in the tournament reduced the company's margin, describing it as an anomaly unlikely to repeat regularly. Despite the lower guidance, DraftKings highlighted strong underlying trends including a higher sportsbook hold, a 16% growth in online sports betting handle, and gains in parlays and same-game parlays that boosted profitability. The company is also focusing on product enhancements such as micro-betting and proprietary jackpots, alongside an AI-first strategy aimed at improving operational efficiency and customer experiences. Investors have responded positively, with shares rising following the earnings release, reflecting confidence in the company’s long-term potential despite short-term challenges. Overall, DraftKings emphasizes the inherent volatility of sports betting outcomes while maintaining optimism about growth driven by innovation and expanding betting options.