DraftKings Inc. (DKNG): Business Model Canvas [Dec-2025 Updated]

You're trying to figure out the financial mechanics behind the massive, regulated sports betting expansion in the US, and honestly, just looking at the stock ticker doesn't tell the whole story. As someone who spent a decade mapping out giants at BlackRock, I can tell you the Business Model Canvas cuts right through the noise to show you the strategic DNA of DraftKings Inc. This isn't just about taking bets; it's a complex machine projecting revenues between $5.9 billion and $6.1 billion for Fiscal Year 2025, supported by over 4.3 million monthly unique payers and deep integration with media powerhouses like ESPN. So, let's pull back the curtain and see exactly how they structure their key activities and manage those hefty customer acquisition costs by diving into the nine essential blocks below.

DraftKings Inc. (DKNG) - Canvas Business Model: Key Partnerships

DraftKings Inc. builds significant competitive advantage through strategic media and market access alliances. These partnerships are designed to drive customer acquisition, increase brand visibility, and secure operational footprints across regulated markets.

The relationship with ESPN is a cornerstone of the late 2025 strategy. DraftKings became the exclusive Official Sportsbook and Odds Provider for ESPN, effective December 1, 2025, replacing the prior arrangement with PENN Entertainment. This deal integrates DraftKings sportsbook, daily fantasy, and DraftKings Pick6 offerings directly across ESPN's ecosystem, including a dedicated betting tab within the ESPN app at launch. The former PENN deal saw ESPN receive approximately $150 million annually in cash payments. Financial terms for the new multi-year DraftKings agreement were not publicly disclosed.

A separate, landmark multi-year advertising agreement is in place with NBCUniversal. This deal grants DraftKings category exclusivity across online sports betting, iGaming, daily fantasy sports, online lottery products, and online horse wagering on NBCUniversal's platforms. This ensures prominent branding during major tentpole events, including Super Bowl LX and the 2026 FIFA Men's World Cup on Telemundo. Financial details for this advertising arrangement were not released.

DraftKings maintains official status across several major US sports organizations, which underpins content and data integration. The company is an official daily fantasy and sports betting partner of the NFL, NHL, PGA TOUR, WNBA, and UFC. Furthermore, DraftKings is an official sports betting partner of the NBA and an authorized gaming operator of MLB. By Q2 2025, DraftKings achieved over 90% availability for MLB and NBA live markets.

Market access is secured through a mix of direct licenses and commercial agreements. In August 2025, DraftKings secured one of two untethered mobile sports betting licenses in Missouri, which cost $500,000 for the standalone permit, compared to a tethered permit at $250,000. Upon launching in Missouri on December 1, 2025, DraftKings will operate regulated sports betting in 29 U.S. states, in addition to Washington D.C. and Ontario, Canada.

The collaboration with the UFC focuses on fan engagement and responsible gaming. DraftKings is the UFC's first-ever Official Sportsbook and Daily Fantasy Partner in the US and Canada, a deal originally valued at $350 million over five years, with 'low nine figures' in cash payments. A recent initiative in 2025 involves airing responsible gaming advertisements across multiple UFC events, with a 30-second version airing during the fight night for UFC 316 on June 7.

Key Partnership Financial and Operational Metrics:

DraftKings reported revenue of $1.41 billion for Q1 2025 and $1,513 million for Q2 2025. The company reaffirmed its fiscal year 2025 revenue guidance midpoint at $6.45 billion.

• DraftKings powers the betting tab within the ESPN app.
• Branding appears during NBCUniversal's Super Bowl LX.
• Official partner status with NFL, NBA, MLB, NHL, PGA TOUR, WNBA, and UFC.
• The company is an authorized gaming operator of MLB.

DraftKings Inc. (DKNG) - Canvas Business Model: Key Activities

Developing and maintaining the proprietary digital betting platform.

The technology infrastructure supports the core offering, which required platform development costs of $187.3 million in 2023. DraftKings Inc. aims to be viewed as technology first, similar to a big tech company. The company is actively incorporating Artificial Intelligence (AI) to enhance efficiency and reduce fixed costs across the business.

Securing new state licenses and expanding market access (e.g., Missouri launch).

DraftKings Inc. maintains a wide footprint, operating its Sportsbook in 28 states plus Washington, D.C. as of November 2025, with iGaming live in 5 states. The company secured a direct mobile sports betting license in Missouri, launching on December 1, 2025. This Missouri entry involved a $30M promotional campaign and benefits from a low 10% tax rate on Gross Gaming Revenue (GGR). As of late 2025, DraftKings holds an estimated 34% market share in the sportsbook market.

The market access footprint includes:

• Sportsbook Live States (as of Nov 2025): 28
• iGaming Live States (as of Nov 2025): 5
• Missouri Launch Date: December 1, 2025
• Missouri Projected Annual Revenue Share: $175 million

Optimizing promotional spending to improve customer lifetime value (LTV).

The focus is a continual push toward making more gross profit per customer and ultimately improving Customer Lifetime Value (LTV). Executives highlighted reducing promotional spending as a percentage of gross gaming revenue in Q1 2025. The Average Revenue Per Monthly Unique Payer (ARPMPU) saw a 16% YoY drop to $97 in Q4 2024. For Q1 2025, Monthly Unique Payers (MUPs) reached 4.3 million, up from 3.4 million in Q1 2024. Excluding the Jackpocket acquisition, the Q1 2025 average revenue per MUP was $122, a 7% YoY increase.

Data analytics and risk management to set odds and manage structural hold.

Significant improvements in structural hold are being achieved, driven by optimizing the parlay mix and focusing on higher margin single bets. The company is committed to long-term EBITDA margins of over 30%. The overall structural Sportsbook hold percentage in Q1 2025 reached 10.4%. This contrasts with competitor FanDuel's hold rate of 11.0%. In the New York market, DraftKings reported a hold rate of 8.3% compared to the statewide average of 9.3%.

Product innovation, including new parlay features and iGaming content.

DraftKings Inc. is launching new features to boost parlay mix and live betting engagement, including products named Stacks and Ghostleg. The Ghostleg feature lets a parlay bet stand even if one leg misses, effectively disappearing. The iGaming strategy involves a shift in focus to attract slots-first customers. The company also recently released new games through its studio and launched a daily rewards program.

Innovation focus areas include:

• New Parlay Features: Stacks and Ghostleg
• iGaming Content: New games via studio and focus on slots-first acquisition
• Live Betting: Focus area supported by tuck-in acquisitions

The company reported Q3 2025 revenue of $1.14 billion, with an Adjusted EBITDA surge of 134.9% year-over-year to $301 million in Q2 2025. Fiscal year 2025 revenue is projected to be between $5.9 billion and $6.1 billion.

DraftKings Inc. (DKNG) - Canvas Business Model: Key Resources

You're looking at the core assets that power DraftKings Inc. right now, late in 2025. These aren't abstract concepts; they are the hard numbers and proprietary systems that drive the business.

The foundation is its proprietary technology platform. This is a unified account management and regulatory compliance system that integrates the Sportsbook, iGaming, and DFS products under a single user identity. This technical architecture allows funds to flow freely between product offerings. Furthermore, the platform incorporates tools from acquisitions like SimpleBet to enhance pricing and risk management, especially for in-game betting, which saw 16% year-over-year growth in handle during Q2 2025. The company also recently acquired Railbird Technologies in October 2025 to build out its new prediction markets platform.

Market access and regulatory footprint are massive resources. DraftKings Inc. has secured licenses to operate its mobile sports betting product in 26 U.S. states plus Washington, D.C. as of December 2025, with a planned launch in Missouri on December 1, 2025. The iGaming product is live in 5 states and the province of Ontario, Canada. The Daily Fantasy Sports (DFS) offering has the widest reach, available in over 40 states.

Brand strength translates directly into market share. In the regulated U.S. online sportsbook GGR (Gross Gaming Revenue) space, DraftKings Inc. holds approximately 34% market share, placing it second to FanDuel, which holds 38%. This strong recognition is being amplified by a major new distribution channel: ESPN designated DraftKings as its official sportsbook and odds provider, with integration beginning in December 2025.

Real-time data feeds are crucial for the in-play betting experience, a strategic priority where live bet handle increased 16% year-over-year in Q2 2025. While specific third-party data feed providers aren't detailed, the integration with ESPN is a major data and content resource, providing odds and sportsbook functionality directly into ESPN's platforms.

The customer base is a tangible asset, showing significant scale as of the first quarter of 2025. The average number of Monthly Unique Payers (MUPs) reached 4.3 million in Q1 2025, a 28% increase year-over-year. If you look at the core business excluding the Jackpocket acquisition, MUPs still grew 11% year-over-year.

Here is a quick look at the geographic and customer scale:

The operational flexibility is also evident in the product mix:

• Sportsbook is live in 26 states plus D.C.
• iGaming/Casino is live in 5 states.
• DFS is available in over 40 states.
• The company repurchased 3.7 million shares in Q1 2025.

Finance: draft 13-week cash view by Friday.

DraftKings Inc. (DKNG) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose DraftKings Inc. over the competition as of late 2025. It boils down to a unified, high-performing digital experience that keeps users engaged across all verticals.

Seamless, integrated platform for Sportsbook, iGaming, and Daily Fantasy Sports (DFS).

DraftKings Inc. offers a single destination for multiple forms of regulated digital wagering. This ecosystem approach is a key differentiator, allowing for cross-platform value delivery. The company operates in sports betting, iGaming, and daily fantasy sports, plus lottery offerings. As of the third quarter of 2025, DraftKings Inc. was live with mobile sports betting in 25 U.S. states plus Washington, D.C., and offered iGaming in 5 states, in addition to its Ontario operations. This integration drives engagement, as seen in the Q3 2025 Monthly Unique Payers (MUPs) reaching 3.6 million average customers.

The value proposition is further quantified by the financial output of these combined segments:

Real-time, dynamic odds and micro-betting options for live engagement.

The focus on in-play wagering is clearly paying off in terms of handle contribution. Live betting accounted for more than half of DraftKings Inc.'s total betting handle during Q1 2025, a first for the company. Management notes that in mature markets, live betting can generate as much as 70-80% of gross gaming revenue. The platform supports this with features like Same-Game Parlays (SGPs) and technology investments that accelerate live betting options.

High-quality, engaging user experience (ranked #1 sports betting app).

User sentiment data from mid-2025 suggests a high-quality mobile experience. DraftKings Inc. earned the highest individual satisfaction score among online gambling apps in the American Customer Satisfaction Index (ACSI) 2025 report, scoring 78 out of 100. App quality was the top driver of satisfaction in that index, scoring 80 points. You can see this reflected in the store ratings:

• iOS App Rating: 4.8 out of 5 stars
• Android App Rating: 4.3 out of 5 stars

The platform is fast and responsive, even during peak usage times like minutes before major NFL slots.

Responsible Gaming tools like 'My Stat Sheet' for player self-management.

DraftKings Inc. offers the 'My Stat Sheet' tool to help players make data-driven decisions about their own play. This feature is available across all DraftKings Inc. and Golden Nugget products. It provides transparency on key metrics:

• Time Spent on Sportsbook & Casino products.
• Net Total of Spent & Won Funds by product.
• Deposits and Withdrawals tracking.
• Wagers placed and Contest involvement.
• Progress against Responsible Gaming Limits set by the player.

This empowers users to review their win/loss record across monthly, yearly, and lifetime views.

Access to exclusive content and promotions via major media partners.

The value proposition includes distribution and acquisition reach bolstered by media relationships. Strategic partnerships with entities like ESPN and NBCUniversal have broadened DraftKings Inc.'s customer acquisition reach. Promotions are tied to live events, and new customer offers in late 2025 often included tangible value, such as receiving eight $25 Bonus Bets if a $5 wager wins, plus three months of NBA League Pass free. The company is also positioning its new DraftKings Predictions product as a significant incremental opportunity, targeting a revenue range of $5.9 billion to $6.1 billion for fiscal year 2025.

Finance: draft 13-week cash view by Friday.

DraftKings Inc. (DKNG) - Canvas Business Model: Customer Relationships

You're looking at how DraftKings Inc. keeps its customers engaged and spending in a market that's only getting more competitive. The relationship strategy hinges on using data to make every touchpoint feel tailored, rewarding the biggest bettors, and ensuring the app experience itself is top-tier.

Automated, data-driven personalization of promotions and offers

DraftKings Inc. is leaning hard into its data infrastructure and artificial intelligence (AI) capabilities to deliver what they call hyper-personalized user experiences. This focus on efficiency and personalization is directly tied to monetization; for example, the Average Revenue Per Monthly Unique Payer (ARPMUP) for the second quarter of 2025 rose 29% year-over-year to $151, driven in part by more efficient promotions. This contrasts slightly with the first quarter of 2025, where the ARPMUP was $108, a 5% year-over-year fall when including the Jackpocket acquisition, though it was up 7% excluding that business. The company uses this data to automatically inject individualized content into communications. For instance, they send personalized season recaps showing a user's past statistics, such as how many lineups they entered or their Best Value Player. Past data shows that using this level of personalization, like Liquid content, can lead to a 199% increase in open rates for mobile push notifications and a 28% lift in email open rates. Also, the CEO noted that AI integration is rapidly converting manual processes across the entire company, including customer service, to agent-driven processes, which should impact the fixed cost structure.

VIP and loyalty programs to retain high-value, high-volume players

The core retention mechanism for high-value players is the DraftKings Dynasty Rewards loyalty program. You earn DraftKings Crowns for every bet you place, and these Crowns determine your tier status. The benefits for top-tier players are significant, including one-on-one service from a Personal VIP Host, access to private events, and exclusive custom offers. The company hosted an invite-only party at Brennan's in New Orleans before the Super Bowl for these VIPs. It's worth noting the scale of this high-value segment: Americans wagered nearly $148 billion on sports in 2024, generating over $13.7 billion in revenue for sportsbooks, with much of that revenue coming from a small handful of these top customers. Still, these programs face scrutiny; a 2024 Connecticut study found that over 50% of that state's sports-betting revenue came from people with a gambling problem, which critics suggest the VIP programs encourage. The program structure includes:

• DraftKings Crowns earned per wager.
• Redemption options at the DK Store.
• A Personal VIP Host for top players.
• Access to Game Tickets and Private Events.

Self-service support and in-app customer service channels

Customer satisfaction is a key metric, and DraftKings Inc. topped the charts in the American Customer Satisfaction Index (ACSI) 2025 report for online gambling apps. The company achieved a score of 78 out of 100. This high score is heavily influenced by the quality of the digital interface, which is critical for self-service. App quality itself scored 80 out of 100 as the most important driver for users. Furthermore, the company provides self-service data tools; for instance, the 'My Stat Sheet' tool saw 336,317 Massachusetts visits from 70,664 unique Massachusetts players in the first quarter of 2025 alone. The overall customer satisfaction scores for online gambling apps in the ACSI report were:

Community building through social features on the platform

DraftKings Inc. views social features as one of the key pillars driving user engagement, alongside live betting and personalization, as cited in their second-quarter 2025 earnings call. While specific community engagement numbers aren't public, the focus on product differentiation suggests an ongoing effort to foster interaction. The complete integration of the Jackpocket acquisition is also expected to increase customer engagement across the platform. The company is also focused on product innovation, launching features like Stacks and Ghostleg to boost engagement, particularly around the parlay mix, which increased by 430 basis points year-over-year in Q2 2025, supporting higher margins and user interaction.

Finance: draft 13-week cash view by Friday.

DraftKings Inc. (DKNG) - Canvas Business Model: Channels

The primary channel for DraftKings Inc. (DKNG) remains the direct-to-consumer delivery of its Sportsbook and iGaming products through proprietary mobile applications on iOS and Android, alongside its dedicated website. This digital-first approach is supported by strong underlying engagement metrics as of late 2025. For the three months ended September 30, 2025, the company reported an average of 3.6 million Monthly Unique Payers (MUPs). The monetization of this base resulted in an Average Revenue per MUP (ARPMUP) of $106 in the third quarter of 2025.

The volume of wagering, or Handle, through these digital channels shows continued growth, with the October Sportsbook Handle increasing 17% year-over-year. This digital dominance is further evidenced by the fact that DraftKings holds about 28% market share in the US sportsbook market. The iGaming vertical, also delivered via these apps, saw significant acceleration, reporting revenue of $451.3 million in Q3 2025, a year-over-year rise of 24.9%.

A significant enhancement to DraftKings Inc. (DKNG)'s channel strategy is the exclusive marketing agreement with ESPN, set to commence on December 1, 2025. This deal positions DraftKings as the exclusive integration provider for all live sports and digital platforms across ESPN's content universe. This integration is expected to cover 73% of national NBA broadcasts, offering unmatched brand visibility. This move follows ESPN's early termination of its previous deal with Penn Entertainment, which involved a cash payment of approximately $1.5 billion over ten years.

Customer acquisition, which heavily relies on digital and traditional media advertising, has shown signs of improving efficiency. For instance, in the first quarter of 2025, the company benefited from an optimization of marketing costs, building on a trend where Customer Acquisition Costs (CAC) saw a roughly 40% year-over-year decrease in the first quarter of 2024. The company's retail presence serves as a physical touchpoint, though the primary focus remains digital. As of Q1 2025, DraftKings was live with mobile sports betting in 25 US states and Washington, D.C..

The channels utilized for customer reach and engagement include:

• Direct-to-consumer via proprietary mobile apps (iOS/Android) and website.
• Integrated content and odds display across ESPN's digital and linear platforms, commencing December 1, 2025.
• Extensive digital and traditional media advertising, with marketing costs being optimized.
• Retail sportsbooks in physical casino partner locations.

DraftKings Inc. (DKNG) - Canvas Business Model: Customer Segments

You're looking at the core groups DraftKings Inc. targets to drive its multi-billion dollar revenue machine. Honestly, it's about segmenting based on product preference and spend level.

Core sports enthusiasts and online gaming players form the foundation. The customer profile skews toward individuals aged 18-34, though a significant portion also falls into the 35-54 age bracket. Engagement is high, with live betting exceeding 50% of the total handle for the first time in Q1 2025. DraftKings Inc. reported 4.3 million Monthly Unique Payers (MUPs) in Q1 2025, a 28% year-over-year increase, showing strong base growth. By Q2 2025, average MUPs settled at 3.3 million, reflecting a 6% annual increase.

The high-value, high-volume bettors and DFS players are critical for margin. These are the users driving the Sportsbook handle. In Q1 2025, the Average Revenue per MUP (ARPMUP) was $108, though without the Jackpocket acquisition impact, it would have been $122. By Q2 2025, ARPMUP surged to $151, a 29% increase year-over-year, showing better monetization from the core betting base. These players are responsible for the massive wagering volumes seen across the platform.

DraftKings Inc. actively targets the mass market customers in newly legalized US states (e.g., Missouri). As of the end of Q2 2025, the mobile sportsbook operates in 26 U.S. jurisdictions plus Ontario, Canada, reaching approximately 49% of the U.S. population. The company is actively preparing for its launch in Missouri, following the successful ballot initiative on November 5, 2024, which is factored into the fiscal year 2025 guidance.

The iGaming-focused customers, including slots-first players, represent a growing, high-margin segment. The iGaming platform is live in five U.S. states, covering about 11% of the U.S. population as of Q2 2025. This segment is showing robust growth, with revenue reaching $423 million in Q1 2025 and climbing to $429.7 million in Q2 2025, a 22.6% year-over-year increase.

Here's a quick look at how these segments translate to the top-line performance based on Q2 2025 results:

You can see the Sportsbook segment is the largest revenue driver, but iGaming is growing fast, too. The MUP data shows the overall reach:

• Average Monthly Unique Payers (Q2 2025): 3.3 million.
• Q1 2025 Monthly Unique Payers: 4.3 million.
• Total Unique Customers (End of 2024): 10.1 million.

Finance: draft 13-week cash view by Friday.

DraftKings Inc. (DKNG) - Canvas Business Model: Cost Structure

You're looking at the major drains on DraftKings Inc.'s bottom line as of late 2025. The cost structure is heavily influenced by regulatory obligations and the relentless need to bring in new bettors. Honestly, the state tax burden is a massive, non-negotiable cost component that varies wildly by jurisdiction.

High state taxes and regulatory fees create a significant drag, which DraftKings has tried to mitigate by passing some of the burden to winners, though that plan was ultimately scrapped. For instance, New York's operator tax rate sits at a steep 51%, and Pennsylvania's is a flat 36%. Illinois uses a graduated structure, hitting the top tier at 40% of Adjusted Gross Revenue (AGR), while Vermont's rate is 31%. Even New Jersey, an early market, recently increased its online tax to 21.00%.

The table below shows the operator tax rates in key states that directly impact the cost of revenue recognition:

Customer acquisition costs (CAC) remain a top expenditure, though DraftKings has been driving efficiency here. In Q1 2025, new customer acquisition was described as highly efficient, and overall CAC declined by nearly 20% in a recent comparison period. The acquisition of Jackpocket was specifically highlighted for its potential to significantly lower customer acquisition costs going forward. Still, the company is cautious about future spending in this area due to the competitive environment.

Platform development, technology infrastructure, and data licensing are embedded within operating expenses. You can see the non-cash component of this through stock-based compensation, which is expected to be about 6% of revenue for fiscal year 2025. For the nine months ending September 30, 2025, cash paid for internally developed software costs saw an increase of $22.4 million compared to the prior year period. Separately, the amortization of acquired intangible assets for the three months ending September 30, 2025, was $33.9 million.

Promotional spending, which directly impacts the net revenue recognized, is being managed more tightly. For instance, promotional reinvestment was noted as more efficient year-over-year as a percentage of gross gaming revenue in Q1 2025. This efficiency helps boost the Adjusted Gross Margin, which the company expected to reach 46% for fiscal year 2025.

DraftKings Inc. is actively targeting operating expenses for efficiency, often through technology integration. While specific AI-driven cost savings aren't quantified yet, the company is focused on expense discipline across the organization. The upcoming launch of DraftKings Predictions is viewed as a significant incremental opportunity, suggesting a strategic shift in how future operating costs might be allocated or offset by new revenue streams.

• Fiscal Year 2025 Adjusted EBITDA guidance range is set between $450 million to $550 million (as of Q3 2025 revision).
• Stock-based compensation expense is projected to be approximately 6% of revenue for fiscal year 2025.
• The company authorized an increase in its share repurchase program from $1.0 billion to $2.0 billion, which impacts financing activities but reflects capital allocation decisions against future cash flows.

Finance: draft 13-week cash view by Friday.

DraftKings Inc. (DKNG) - Canvas Business Model: Revenue Streams

You're looking at how DraftKings Inc. actually brings in the cash, which is always the most critical part of any business model review. For the full fiscal year 2025, DraftKings Inc. projects revenue to land between $5.9 billion and $6.1 billion.

To give you a clearer picture of the current mechanics, let's look at the most recently reported quarterly breakdown, which was for the second quarter of 2025. This shows the relative weight of each segment driving that full-year forecast. Honestly, the Sportsbook is still the engine here, but iGaming is growing fast.

Here's the quick math on how those top-line numbers are generated from customer activity:

• Sportsbook Net Revenue (Vigorish/Hold) is derived from the difference between total wagers placed (Handle) and customer payouts. In Q2 2025, the Sportsbook Handle reached $11.5 billion.
• The Sportsbook net revenue margin, which is the hold percentage, improved to 8.7% in Q2 2025, up from 6.4% in Q2 2024.
• iGaming (Online Casino) Net Revenue is the house edge retained from games played on the platform. This segment generated $429.7 million in Q2 2025.
• Daily Fantasy Sports (DFS) Contest Entry Fees (Rake) and Advertising and Sponsorship revenue are grouped into the 'Other' category, which totaled $85 million for the quarter.
• Average Revenue per Monthly Unique Payer (ARPMUP) for the quarter was $151, a 29% increase year-over-year.

The company is definitely seeing monetization improve, partly because the Sportsbook hold percentage is structurally better, and partly because they are managing promotional spending more efficiently. If onboarding takes 14+ days, churn risk rises, but their ARPMUP suggests they are keeping high-value customers engaged.

Finance: draft 13-week cash view by Friday.