Investing in the businesses that are best-positioned to benefit from powerful long-term trends is a proven way to build lasting wealth. Fortunately, we have one such opportunity today with DraftKings (DKNG -1.69%).

The digital sports betting platform provider is a powerhouse in the legalized gambling market. And with this booming industry set to expand rapidly in the coming years, DraftKings' investors stand to cash in big. Here's why.

1. Torrid sales growth

DraftKings' revenue surged 73% to $2.2 billion in 2022. The gaming company's growth accelerated in the first quarter, with revenue soaring 84% year over year to $417 million. These gains furthered a trend that's seen DraftKings' sales grow exponentially in recent years.

DKNG Revenue (Annual) Chart

DKNG Revenue (Annual) data by YCharts

This impressive growth was fueled by the successful launches of DraftKings' online sportsbook in recently legalized markets, which have enabled it to rack up customers at a rapid clip. Most recently, the company's monthly unique paying customers jumped 39% to 2.8 million in the first quarter, thanks in part to its entry into Ohio and Massachusetts. 

Better still, DraftKings' average revenue per payer rose 35% to $92, while its customer acquisition cost declined by 27%. The company was able to increase its sportsbook hold rate -- the percentage of revenue it earns for every dollar wagered on its platform -- as it scaled back its promotional activity. 

Notably, much of these gains came during a period of high inflation and tepid economic growth. This suggests that the sports betting industry is less cyclical than many investors may have thought -- and that it's likely to hold up relatively well during economic downturns.

2. A path to profits

DraftKings is clearly becoming more efficient at attracting and retaining customers. This bodes well for its long-term success.

Although it's not yet profitable, DraftKings is making significant progress toward achieving sustained profitability. Its first-quarter operating loss narrowed to $390 million from $516 million in the prior-year period. 

Moreover, management projects that DraftKings will generate nearly $150 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q4 -- and positive full-year adjusted EBITDA in 2024. To achieve these goals, DraftKings' leadership is prioritizing expense reduction and other efficiency initiatives designed to further improve the company's operating margin.

3. Plenty of room for expansion still ahead

U.S. commercial gaming revenue topped $60 billion in 2022, up from $53 billion in 2021, according to the American Gaming Association. And yet, only 33 states have legalized and launched sports betting operations. DraftKings currently operates in 21 of them. 

Map of the U.S. showing which states have legalized and implemented sports betting, which states have legalized but not implemented it, which states where it is illegal, and which states where is it illegal but there is pending legislation.

Image source: Statista.

More states are likely to legalize sports gambling in the coming years. The tax revenue can be substantial, and many people enjoy the entertainment value betting can provide. "We think the legislative environment is overall supportive of greater market access as it's a win-win for consumers and states," Needham analyst Bernie McTernan said earlier this month. 

McTernan also reiterated his buy rating and $28 price forecast on DraftKings' stock. That's a reasonable price target considering the company's attractive growth prospects, and it would represent returns of roughly 22% for investors who buy shares today.

New products should help to further expand DraftKings' addressable market. In March, the gaming leader debuted a new app for horse racing wagers.