Potential Profit Decline for DraftKings in Q1 Due to Impact from March Madness
In the world of sports, the 2025 NCAA basketball tournaments made history, with the women's Elite Eight consisting entirely of one and two seeds, leading to a Final Four of three one seeds and champion UConn, which was a two seed. This unprecedented event marked a significant milestone for women's college basketball, as the tournament achieved the second-highest viewership on record with 8.6 million average viewers and a peak of 9.9 million for the championship game [1].
The surge in viewership suggests high fan engagement and potentially increased betting activity during the tournaments. High viewership generally correlates with higher betting volume on college basketball events, such as March Madness. However, there is no direct publicly available information detailing the impact of these 2025 NCAA tournaments on the earnings of sportsbook operators, including DraftKings (NASDAQ: DKNG).
Analyst Bernie McTernan of Needham has cautioned that the lack of upsets in the 2025 editions of March Madness could potentially be bad news for DraftKings and its competitors. Despite favorites performing well in the tournaments potentially negatively impacting sportsbook operators' first-quarter earnings, McTernan believes DraftKings may be starting the second quarter on a strong note [2].
Tilman Fertitta, the soon-to-be former head of the Golden Nugget casino empire and the largest investor in Wynn Resorts (NASDAQ: WYNN), is also playing a role in the competition. Should the University of Houston win the 2025 NCAA Tournament, Fertitta will win Bloomberg's "2025 March Madness Brackets for a Cause" competition [3].
As for DraftKings' financial performance, without specific data or statements, the exact impact on DraftKings' earnings cannot be confirmed from the provided information. However, investors may find comfort in McTernan's continued rating of DraftKings as a "buy" with a $65 price target, implying the stock can nearly double from today's closing price of $32.88 [4].
It's worth noting that the men's Elite Eight consisted of seven one and two seeds, with all one seeds advancing to the Final Four. The women's bracket featured more parity, with two three seeds and a pair of five seeds advancing to the Sweet 16 [5].
In conclusion, while the strong performance by favourites in the 2025 NCAA Tournaments could negatively impact sportsbook operators' first-quarter earnings, there is optimism for a strong second quarter, particularly for DraftKings. Precise financial impacts will likely be revealed in DraftKings' upcoming quarterly earnings reports or official statements addressing their sportsbook performance tied to the 2025 NCAA basketball tournaments.
References: [1] [4] - Source not provided [2] [3] [5] - The Street (2025, April 7). [6] - Bloomberg (2025, April 7). [7] - ESPN (2025, April 7).
Financial analysts have expressed concerns that the lack of upsets in the 2025 NCAA basketball tournaments could potentially negatively impact earnings for sportsbook operators, including DraftKings, due to a lower potential for betting volume on college sports events like March Madness. Meanwhile, DraftKings' financial performance remains optimistic, with analyst Bernie McTernan maintaining a 'buy' rating for the company and a $65 price target, suggesting the stock could nearly double from its current price. Sports betting activity during collegiate sports events like the NCAA basketball tournaments may still be significant, but the exact financial impact on DraftKings cannot be confirmed without specific data or statements from the company.
