- About 3.5% of workforce to be laid off
- DraftKings shifting investment from business-to-business into mobile developments
- Adjusted EBITDA loss of up to US$800m expected for fiscal 2022
DraftKings is cutting 140 jobs as part of a reorganisation designed to make the US gambling firm more efficient as it chases profitability.
The layoffs equate to about 3.5 per cent of DraftKings’ workforce and affect various functions, including engineering and talent acquisition. Roles will be eliminated primarily in its Europe, Middle East and Africa (EMEA) division, though some US jobs are also being cut.
“We are constantly evaluating our teams to ensure they are best positioned to meet our company goals in 2023 and beyond,” a DraftKings spokesperson said in a statement to CNBC.
As well as looking to finetune its operations, DraftKings intends to shift investment from business-to-business into mobile developments.
The company is set to release its 2022 fourth quarter results later this month, having ended Q3 with revenue of US$502 million, up 136 per cent year-over-year (YoY). Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) loss for fiscal 2022 is expected to be between US$780 million and US$800 million.
“Our team continue to drive top-line growth through highly effective customer engagement and compelling product and technology enhancements while remaining focused on our path to profitability,” Jason Robins, DraftKings’ co-founder, chief executive and chairman of the board, said last November.
DraftKings’ revenue continues to climb but the company, along with virtually every other major US betting brand, is still posting considerable losses. These layoffs are the latest effort to speed up the journey to profitability.
Helping DraftKings’ cause is the continued appetite from American punters to bet, coupled with more states legalising gambling. Notably, next weekend’s Super Bowl is projected to pull in more than US$1.1 billion in wagers in the US, which would make it the most bet-upon sports event in the country’s history.
The money is coming in for betting firms but stiff competition, big spending and heavy taxation – as an example, sportsbooks are required to pay a 51 per cent tax rate in New York for ten years – have hampered profit prospects. So far, FanDuel is the only online US operator to finish in the black for one quarter and expects 2023 to be the first time it hits full-year profitability.