DraftKings' iGaming Up 25%: A Second Growth Engine Emerging?

DraftKings Inc. DKNG delivered one of its strongest iGaming performances in recent years, with third-quarter net revenues climbing 25% year over year, marking the fastest pace since early 2024. This acceleration stands out in a quarter otherwise pressured by unfavorable sports outcomes, underscoring how iGaming is becoming a more stable and increasingly meaningful contributor to the company’s broader growth story.

Management highlighted that both active customers and revenue per customer improved significantly, supported by better gross gaming revenue generation and more advanced promotional optimization.

The latest quarter also benefited from DraftKings’ ongoing product upgrades and content expansion. The company is leaning into innovative slot and jackpot development and recently appointed a new leader to strengthen its iGaming strategy. These moves suggest DraftKings is not simply riding market growth but actively positioning itself to capture a greater share as U.S. iGaming matures. With only a limited number of states currently offering online casinos, the segment provides DraftKings a long runway, one that management believes could rival sportsbook economics over time.

Importantly, iGaming’s momentum is arriving as sportsbook results remain more volatile due to shifting sports outcomes. While those swings are inherent to the betting business, iGaming offers steadier revenue patterns, helping diversify DraftKings’ earnings trajectory. As the company refines cross-sell, enhances proprietary content and advocates for expanded state legalization, the 25% surge may be an early signal that a true second growth engine is taking shape, one capable of supporting long-term margin expansion and more predictable performance alongside the sportsbook franchise.

How Competitors Compare in the iGaming Landscape

Flutter Entertainment FLUT, parent of FanDuel, is DraftKings’ most formidable publicly traded rival in the U.S. iGaming ecosystem. FanDuel continues scaling its online casino presence through proprietary game development and tight integration with the leading sportsbook platform. This cross-sell advantage directly challenges DraftKings’ efforts to build iGaming into a second growth engine. As Flutter invests in product depth and personalization, the competitive bar for user engagement and retention continues to rise.

MGM Resorts International MGM, through its majority-owned BetMGM platform, remains another major publicly traded competitor with a strong foothold in online casino. BetMGM’s extensive game library, omnichannel rewards tied to MGM properties and early-mover advantage in key iGaming states give it meaningful staying power. For DraftKings, sustaining its 25% iGaming growth means not only expanding product innovation but also outpacing MGM’s entrenched customer ecosystem and nationwide brand strength.

DKNG’s Price Performance, Valuation & Estimates

Shares of DKNG have lost 18.5% in the past three months compared with the industry’s decline of 9.5%.

Price Performance

DraftKings is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales ratio of 2.41X.

P/S (F12M)

The Zacks Consensus Estimate for DKNG’s 2025 and 2026 has declined in the past 60 days.

DKNG currently carries a Zacks Rank #5 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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