The reopening of restaurants, movie theaters, and other entertainment venues has cut into some online activities but apparently not online gambling.
DraftKings reported Friday that its second-quarter revenue jumped 320 percent from a year ago to $298 million as customers placed wagers on spring and summer sporting events like the Masters, the NBA playoffs, Wimbledon, and UFC fights. Wall Street analysts on average had forecast revenue of only $247 million.
“At this stage, we’re not seeing any signs of the economy’s reopening impacting demand for our mobile product offerings,” DraftKings chief executive Jason Robins said on a call with analysts.
Separately, DraftKings disclosed that it is under investigation for allegations that it made false or misleading statements last year when it acquired a Bulgarian gambling software firm called SBTech and simultaneously went public by merging with a special purpose acquisition vehicle.
The Securities and Exchange Commission subpoenaed the company July 9 seeking information about allegations of fraud made by investment firm Hindenburg Research, DraftKings said in a regulatory filing. In June, Hindenburg released a lengthy report alleging that DraftKings was providing online gambling software in countries where such wagering is not permitted, via SBTech. Hindenburg also bet against the company’s stock price by selling shares short.
DraftKings, which has previously said it conducted a “thorough review” of SBTech before the merger, said it did not expect a serious penalty from the SEC.
“Despite the potential for significant damages, the Company does not believe, based on currently available information, that the outcome of this proceeding will have a material adverse effect on DraftKings’ financial condition, although the outcome could be material to DraftKings’ operating results for any particular period, depending, in part, upon the operating results for such period,” the company wrote in the filing.
DraftKings’ stock, which had gained almost 60 percent over the past year, went up 2 percent on Friday to close at $51.59 after the second-quarter results were released.
The Boston-based company also further detailed its plan to expand into the buzzy new market of selling digital collectibles based on the same technology as bitcoin. DraftKings said July 21 it was creating a marketplace for buying and selling its own line of nonfungible tokens, or NFTs.
On Friday, Robins said that the company had signed exclusive deals for producing NFTs with athletes including Tom Brady, Tiger Woods, Derek Jeter, Wayne Gretzky, Tony Hawk, and Naomi Osaka.
“Our first NFT drop will be in the near future and instantaneously millions of customers will have the ability to seamlessly buy and sell digital collectibles across sports, entertainment, and culture using their existing DraftKings account,” Robins said. “But this is our first foray into something that’s a little bit different, so we’ll have to see how the data shakes out,” he added.
The company is not expecting a “huge amount” of added revenue from the NFT marketplace this year. “This will be very early days of us launching,” Robins said.
The NFT marketplace has focused mainly on digital works of art, such as a piece called “Everydays: The First 5,000 Days” by the artist Beeple which sold for $69 million in March. But the NBA has partnered with Dapper Labs to sell video clips from basketball games as NFTs garnering substantial sales of close to $700 million over the past year.