DraftKings is finding innovative ways to enter new markets that could bode well for its future growth. In this Fool Live segment from "The Gaming Show," recorded on Feb. 14, Motley Fool contributor Jose Najarro discusses this company's potential in areas such as blockchain technology, social networking, and iGaming.
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Jose Najarro: My overall thoughts as of last earnings, this is not counting New York, this is not counting Louisiana, online sports betting is only available in 29 percent of US populations. I know Clay mentioned some bigger numbers earlier, I think those might be updated. But the big difference too is online sports betting doesn't mean casino betting, and that's another thing DraftKings does. This is the iGaming market. iGaming in the last quarter, they were only available in 11 percent of the United States population. iGaming, online casino is still pretty early on for this company as well.
Like I mentioned, DraftKings is trying to take the lead in the NFT blockchain market. They're really focusing in creating their own marketplace, focusing with the NFL, and that Autograph company that I mentioned. They are also focusing on becoming more of content creation and being a social platform. I think they're trying to make their platforms aware that hey, you can share with others your bets to make it more, I want to say, a positive experience. Some risk that I'm pretty sure many would have said high competition in this market, also a very heavily regulated market to some extent. It is expensive to grab initial players and to keep these players.
I know, Jon, I think earlier on when we were talking, you mentioned that DraftKings took a huge hit in gross margins. One of those reasons is because it's super expensive to grab initial players. In this past year, DraftKings' gross margins has dropped from 40 something to 30 something, I forget the actual number, but a huge reason for that is there have been numerous new states, and those new states usually come with a lot of expenses when entering a market to grab those users. As an investor, I'm really focusing just in the overall how is this company seeing the future growth in the upcoming years.
