DraftKings Targets Stronger iGaming Growth in 2027

DraftKings expects its increased investment in acquiring online casino customers to deliver stronger financial returns in 2027, despite promotional spending limiting revenue growth during the third quarter of 2026.

The US gambling operator reported a 76% year-on-year increase in iGaming customer acquisition during Q3, while gross gaming revenue grew by 7% and net revenue increased by just 2%.

The difference reflects higher promotional costs associated with attracting new players, which reduced the immediate financial benefit of the company’s expanding customer base.

DraftKings believes those customers will become more profitable over time as their activity develops and introductory promotional expenses decline.

Early indications of improving performance emerged in October, when iGaming gross revenue growth accelerated to 12% year over year, compared with 7% across the third quarter.

Paid active days on the company’s iGaming app also increased by 24% during October, suggesting that customer engagement is strengthening alongside acquisition.

However, the company’s longer-term performance will depend on whether the additional players generate sufficient revenue to justify the promotional investment required to attract them.

DraftKings CEO Defends Increased Spending on New iGaming Customers

During DraftKings’ third-quarter earnings call, chief executive Jason Robins addressed questions about the company’s aggressive customer acquisition strategy.

Analysts questioned whether the substantial increase in new players indicated that DraftKings was attracting customers with lower long-term value.

Robins rejected that interpretation, explaining that the higher promotional costs were primarily a consequence of stronger-than-anticipated customer acquisition rather than a deliberate increase in spending per customer.

“I wouldn’t say that we’re investing that much more,” Robins said. “Really, the bulk of investment came from just higher-than-expected new customer and new customer promos.”

He acknowledged that introductory offers and other acquisition-related incentives had affected short-term profitability.

However, Robins argued that acquiring more customers than expected should ultimately improve the company’s financial performance in subsequent quarters.

“When new customers perform ahead of what you expect, you have more new customer promo, which in the given quarter will drive a little bit of bottom line softness, but ultimately leads to much better revenue and EBITDA in future quarters,” he explained.

The strategy relies on customers continuing to use DraftKings’ iGaming products after their initial promotional incentives have ended.

If those players remain active and generate revenue over a longer period, the company expects to recover its acquisition costs and benefit from higher customer lifetime value.

Marketing Efficiencies Support DraftKings’ 2027 Outlook

DraftKings also believes improvements in its marketing efficiency have contributed to the increase in customer acquisition.

According to Robins, the company has been able to attract more players without increasing its marketing expenditure at the same rate.

This suggests that DraftKings is improving its customer acquisition costs, commonly referred to as CAC, while expanding its player base.

Robins said the company expects the customers acquired during 2026 to contribute more meaningfully to revenue and profitability throughout the following year.

“We’ll be able to realise the benefits of those cohorts throughout the year, and not just have that short-term hit,” he said.

DraftKings has already incorporated the stronger-than-expected acquisition performance into its financial expectations for 2027.

However, Robins emphasised that the company’s projections do not depend on customer acquisition accelerating further or current operating trends improving.

Any additional growth beyond those assumptions could therefore provide upside to the company’s existing outlook.

The chief executive said DraftKings was focused on attracting more customers while continuing to reduce the relative cost of acquiring them.

“We are accelerating share, but really what we’re looking at is just more customers coming in at more efficient CACs,” Robins said.

DraftKings Expects New Customer Cohorts to Generate Long-Term Revenue

A central part of DraftKings’ strategy involves forecasting how newly acquired customers will behave over time.

The company uses historical customer data to estimate future engagement, spending and profitability as players move beyond their initial promotional periods.

Robins said DraftKings has sufficient experience with similar customer groups to support its expectations for the latest wave of acquisitions.

“These are not like new things,” he said. “This is just more volume of the same thing we’ve been seeing for years. So, we have a very good understanding of how those cohorts will model out.”

The company therefore views the current acquisition surge as an expansion of an established strategy rather than a fundamental change in its approach to iGaming.

Nevertheless, the difference between customer acquisition growth and net revenue growth remains significant.

While the 76% increase in new customers demonstrates DraftKings’ ability to attract players, the relatively modest 2% rise in net revenue shows how heavily promotional costs affected the quarter.

The company’s expectations for 2027 will depend on whether those customers continue gambling after their introductory incentives expire and generate the anticipated returns.

Exclusive Casino Games and Rewards Help Attract Players

DraftKings has also invested in improving its online casino offering to support customer acquisition and retention.

The operator highlighted several product developments, including additional exclusive gaming content, new rewards and improvements to how games and promotions are presented to customers.

Among the exclusive titles is the Cashingo franchise, which forms part of DraftKings’ strategy to differentiate its casino platform from competing operators.

The company believes these improvements are contributing to stronger customer engagement and helping attract new users.

Product development is particularly important in the competitive US iGaming market, where operators frequently rely on promotional incentives to encourage players to switch platforms or register new accounts.

Exclusive games and loyalty rewards can provide additional reasons for customers to remain active after introductory offers have ended.

The increase in paid active days during October suggests that engagement is improving, although further results will be needed to determine whether that growth translates into sustained net revenue gains.

Sportsbook Revenue Rises 36% as DraftKings Gains Market Share

While iGaming customer acquisition dominated much of the discussion surrounding DraftKings’ third-quarter results, the company’s sportsbook business also delivered strong growth.

Sportsbook net revenue increased 36% year over year in Q3 2026, supported by a 12% rise in betting handle.

The company also reported an improvement in sportsbook handle share for the fourth consecutive quarter.

The results indicate that DraftKings continued strengthening its position in the US sports betting market while investing in other areas of its business.

Robins also highlighted three consecutive quarters of iGaming market share gains, despite the company’s substantial spending on its prediction markets offering.

The performance suggests that DraftKings has maintained momentum across its established gambling products while allocating resources to newer business opportunities.

However, the company’s increased investment in prediction markets adds another consideration when assessing its broader profitability and spending priorities.

DraftKings Faces Pressure to Convert Customer Growth Into Profitability

DraftKings enters 2027 with a substantially larger group of recently acquired iGaming customers and expectations of stronger returns as those players become more established.

The company points to improved marketing efficiency, exclusive casino content and historical customer data as reasons for confidence in its acquisition strategy.

October’s acceleration in gross revenue growth to 12%, alongside a 24% increase in paid active days, provides early evidence that the additional customers are becoming more active.

However, the third-quarter figures also demonstrate the immediate cost of that expansion.

Despite acquiring 76% more iGaming customers, DraftKings recorded only 2% growth in net revenue as promotional spending absorbed much of the benefit.

The company’s challenge in 2027 will be to demonstrate that these customer cohorts can generate sustained revenue and EBITDA growth without requiring promotional investment to continue at the same intensity.

For now, DraftKings is prioritising customer acquisition and market share gains, with management expecting the financial benefits of that strategy to become more visible over the coming year.