DraftKings Launches in Missouri, Bolstering Growth Amid Persistent Risks

What happened

DraftKings announced it will launch mobile sports wagering in Missouri on December 1, 2025, under a temporary direct license that allows independent operation without casino or team affiliations. This expansion aligns with the company's strategy to drive revenue growth through new state entries, as detailed in the DeepValue report, which highlights DraftKings' reliance on legalization for scaling its sportsbook and iGaming segments. The Missouri launch is factored into management's 2025 guidance of $5.9–6.1 billion in revenue and $450–550 million in Adjusted EBITDA, supporting the narrative of inflecting cash flow and top-line momentum. However, this development does little to mitigate the significant regulatory, tax, and antitrust risks emphasized in filings, including potential state-level tax hikes and ongoing scrutiny of the DraftKings-FanDuel duopoly. Consequently, while the entry reinforces near-term growth prospects, it underscores the volatility and external pressures that could impede sustained profitability.

Implication

For investors, the Missouri expansion should contribute to near-term revenue growth and user acquisition, aligning with DraftKings' guidance and potentially boosting cash flow from operations. However, the move does not alter the high dependency on favorable regulatory outcomes, as increased scrutiny or tax changes in key states could erode margins and disrupt growth trajectories. The launch may temporarily enhance investor sentiment by demonstrating execution capability, but it does not resolve underlying issues such as persistent GAAP losses, leverage from convertible notes, and antitrust exposures that could trigger thesis-breaking events. In the medium term, success in Missouri could improve economies of scale, yet investors must weigh this against the possibility of intensified competition and promotional costs in a crowded market. Overall, while the expansion reinforces DraftKings' position in a growing industry, it necessitates vigilant monitoring of regulatory developments and financial metrics to assess long-term viability.

Thesis delta

The Missouri launch was already anticipated in DraftKings' guidance and does not materially shift the investment thesis, which remains a 'POSSIBLE BUY' due to growth momentum and cash flow inflection. It reinforces the company's execution on state expansions but highlights the ongoing reliance on a benign regulatory environment and disciplined capital allocation. Investors should view this as a confirmation of near-term catalysts rather than a reason to alter their risk assessment, given the unchanged high exposure to policy and financial risks.