How DKNG (DraftKings) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a digital gaming and entertainment platform like DKNG Income Statement Overview makes money is essential for investors and anyone interested in the business of online gaming and sports betting. In this post, we break down DKNG's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick DKNG Overview

DKNG operates a leading online gaming and sports betting platform, offering digital sports wagering, casino games, and fantasy sports contests. Revenue comes primarily from online gaming activities, including sports betting and casino products, delivered through its proprietary technology platform. The company’s business is focused on the U.S. and select international markets, with a single revenue segment reported for Q3 2025.

Revenue Breakdown

• Total Revenue (Q3 2025): $1.14B (+4.4% YoY)
  • Other Revenue by Product: $1.14B (100% of total)
  • Gaming Software Revenue: $0M 0%
  • Online Gaming Revenue: $0M 0%
  • Growth is powered by continued expansion in legalized U.S. markets and increased user engagement on the platform.

Gross Profit and Margins

• Gross Profit: $359.9M (31.5% gross margin)
  • Cost of Revenue: $784.1M (+5.6% YoY)
  • DKNG maintains moderate margins due to the scalability of its digital business model, though gross margin is pressured by high promotional costs and revenue share agreements with partners.
• Most costs come from platform operations, payment processing, and revenue-sharing arrangements with gaming partners and state regulators.

Operating Income and Expenses

• Operating Income: Not reported for Q3 2025 (operating expenses exceed gross profit)
• Operating Expenses: $517.2M (+20.6% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $517.2M (+5.6% YoY, 45.2% of revenue) — Includes all selling, general, and administrative costs, such as marketing, personnel, and technology infrastructure.
  • DKNG continues to invest heavily in marketing and platform development while maintaining efficiency in core operations.

Net Income

• Pre-Tax Income: Not reported for Q3 2025
• Income Tax: Not reported for Q3 2025
• Net Income: $256.8M (+12.6% YoY, 22.4% net margin)
• DKNG converts a significant portion of sales into profit due to its scalable digital platform and disciplined cost management.

What Drives DKNG's Money Machine?

• Online Gaming Platform: 100% of revenue is generated from online gaming and related digital products.
• User Growth and Engagement: DKNG’s active user base and average revenue per user are key metrics driving top-line growth.
• Strategic Investment in Technology and Marketing: The company invests in platform enhancements, user acquisition, and retention to sustain competitive advantage.
• Future Growth Areas: Expansion into new states and international markets, as well as new product offerings (e.g., iGaming), are expected to drive future growth, though these areas may not yet be profitable.

Visualizing DKNG's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs, 22.4% of revenue drops to the bottom line.

Key Takeaways

• DKNG's money comes overwhelmingly from its online gaming platform and digital wagering products.
• High gross and net margins illustrate the power of DKNG's scalable digital business model.
• Heavy investment in marketing and technology, balanced by efficiency in operating costs.
• Ongoing growth is driven by user acquisition, market expansion, and product innovation.

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FAQ About DKNG's Income Statement

1. What is the main source of DKNG's revenue in 2025?

DKNG generates over 100% of its revenue from online gaming and related digital products, reported as "Other Revenue by Product" in Q3 2025. No revenue was reported from gaming software or online gaming as separate segments.

2. How profitable is DKNG in Q3 2025?

DKNG reported net income of $256.8M in Q3 2025, with a net margin of approximately 22.4%, reflecting strong profitability driven by its scalable digital platform and disciplined cost management.

3. What are the largest expense categories for DKNG?

The biggest expenses on DKNG's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs, which totaled $517.2M in Q3 2025 (45.2% of revenue), as DKNG prioritizes marketing, technology, and platform operations.

4. Why does [segment/division] operate at a loss?

DKNG does not report separate segment losses for Q3 2025. However, the company’s aggressive investment in marketing and technology can result in periods where operating expenses exceed gross profit, reflecting a strategy focused on long-term growth and market share expansion.

5. How does DKNG's effective tax rate compare to previous years?

DKNG's effective tax rate for Q3 2025 was not disclosed. Investors should review annual filings for a detailed comparison, as effective tax rates can be influenced by factors such as share-based compensation and international structuring.