Tren Griffin+ Your Authors @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Dec. 24, 2019 1 min read + Your Authors


1. What are the unit economics of Draft King?

2. How much cash does the business model eat? 

Capital Research, Wellington Management and Franklin Templeton have committed to invest $304M in the company’s common stock. Diamond Eagle has $400M in cash via its IPO. DraftKings expects $500M in unrestricted cash. 

"DFS revenue in 2019 is estimated at $213M" 

"Per figures from the investor presentation, 40% of online sports betting gross profit in New Jersey over the past eighteen months has come from cross-selling to the DFS database."

"Revenue growth had slowed to the low-single-digits. DFS contests have huge vigs (albeit before promotion), and casual players have struggled to win. Figures from DraftKings show that 86% of players have been net losers or breakeven over the past 30 days."

AKA "net depositors".

The Draft Kings business model is to cross sell online sports betting?

What does it cost to acquire a online sports betting customer via other channels?

"Just as grocery stores sell turkeys for rock bottom prices as loss-leaders..." 

"In New Jersey, the average cost of acquiring an online casino player is now well over $500 per new depositing customer, according to operators in the state. That’s a substantial price to pay for a customer in a ring-fenced market" 

You can follow @trengriffin.


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