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In a pair of quarterly earnings calls this week, two prospective players in the Missouri sports betting market offered indications that they’re already factoring the Show Me State into their long-term financial plans.
Both DraftKings and Penn Entertainment told investors that Missouri is at the forefront of their plans moving forward.
Missouri sports betting is set to launch on Dec. 1, and both DraftKings and Penn brands ESPN Bet and Bally Bet are expected to be major players in the industry.
DraftKings expects to easily absorb costs to launch in MO
DraftKings CFO Alan Ellingson noted in the earnings call that the costs of launching in Missouri will not impact the company’s bottom line.
“We are on track to deliver adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) near the midpoint of the $800 million to $900 million range, as our higher annual revenue positions us to absorb our anticipated mobile sportsbook launch in Missouri.”
Ellingson also said DraftKings now expects its sportsbook net revenue margin “to exceed 7.5%, ahead of the range of 7% to 7.5% that we had provided last quarter,” even when factoring in the Missouri launch plus “anticipated financial impacts from higher tax rates in New Jersey, Louisiana, and Illinois.”
DraftKings expects “$35 million to $45 million of EBITDA impact this year” from launching its sportsbook in Missouri. The company will learn the fate of its untethered license application by the end of this week.
Penn seems to factor in MO in updated forecast
Penn Entertainment, which has not officially shown up on the Missouri Gaming Commission’s list of applicants, did recently post job openings for sportsbook manager positions at two of its St. Louis casinos.
In its earnings call, Penn referenced adjusted sportsbook revenue numbers to “reflect $10 million of incremental costs” due to its launch of online sports betting in Missouri. That would presumably be through its ESPN Bet brand, though with Bally under its umbrella, it could also go live with Bally Bet.
Penn Executive VP and CEO Felicia Rae Kantor Hendrix seemed to factor in a launch in Missouri as a reason for adjusting its forecast.
“We now forecast US OSB handle market share, excluding New York, of 3.4% in the third quarter and 4% in the fourth quarter. For iCasino GGR share, we expect 3% in the third quarter and 3.2% in the fourth quarter. Somewhat offsetting these lower volume assumptions are an expectation for slightly higher sportsbook hold rates in the second quarter.”
Tethered deadline less than a month away
Most of the sports betting licenses in Missouri – 31 of the 33 – are what the MGC calls tethered, meaning an applicant must have a partnership with a casino operating in the state or linked to a Missouri-based sports franchise to qualify.
With the deadline to apply for a tethered license less than a month away, Underdog is still the only known applicant.
FanDuel, Circa Sports, and DraftKings are vying for the two available untethered licenses.
