The following discussion and analysis should be read in conjunction with our
financial statements and related notes included elsewhere in this Quarterly
Report on Form 10-Q (this "Report") and the section entitled "Risk Factors" in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as
filed with the SEC on February 18, 2022. As a result of the GNOG Transaction,
which was consummated on May 5, 2022, New DraftKings became the going-forward
public company and the direct parent company of both Old DraftKings and GNOG.
New DraftKings was renamed "DraftKings Inc." at the closing of the GNOG
Transaction and is the registrant filing this Report as the successor registrant
for Old DraftKings. Unless otherwise indicated, the terms "DraftKings," the
"Company," "we," "us," or "our" refer to (i) Old DraftKings for periods
preceding the Closing Date and (ii) New DraftKings for periods on and subsequent
to the Closing Date, in each case, together with their respective consolidated
subsidiaries.

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995 that
reflect future plans, estimates, beliefs and expected performance. The
forward-looking statements depend upon events, risks and uncertainties that may
be outside of our control. The words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and similar expressions may
identify forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. You are cautioned that our
business and operations are subject to a variety of risks and uncertainties,
many of which are beyond our control, and, consequently, our actual results may
differ materially from those projected.

Factors that could cause or contribute to such differences include, but are not
limited to, those identified below and those discussed in the section entitled
"Risk Factors" included elsewhere in this Report. Any statements contained
herein that are not statements of historical fact may be forward-looking
statements.

•factors relating to our business, operations and financial performance, including:

•our ability to effectively compete in the global entertainment and gaming industries;

•our ability to successfully acquire and integrate new operations;

•our ability to obtain and maintain licenses with gaming authorities;

•our inability to recognize deferred tax assets and tax loss carryforwards;



•market and global conditions and economic factors beyond our control, including
the potential adverse effects of the ongoing global coronavirus ("COVID-19")
pandemic on capital markets, general economic conditions, including inflation,
unemployment and our liquidity, operations and personnel;

•intense competition and competitive pressures from other companies worldwide in the industries in which we operate;

•our ability to raise financing in the future;

•our success in retaining or recruiting officers, key employees or directors; and

•litigation and the ability to adequately protect our intellectual property rights.



These risks and other factors include those set forth under the caption "Risk
Factors" in our Annual Report on Form 10-K for the fiscal year ended December
31, 2021, as filed with the SEC on February 18, 2022. Due to the uncertain
nature of these factors, management cannot assess the impact of each factor on
the business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement
is made, and we undertake no obligation to update any of these statements to
reflect events or circumstances occurring after the date of this Report, except
as required by applicable law. New factors may emerge and it is not possible to
predict all factors that may affect our business and prospects.

                                       28
--------------------------------------------------------------------------------

Our Business



We are a digital sports entertainment and gaming company. We provide users with
sports betting ("Sportsbook"), online casino ("iGaming") and daily fantasy
sports ("DFS") products, as well as media and other online consumer products. We
are also involved in the design and development of sports betting and casino
gaming software for online and retail Sportsbooks and casino gaming products, as
well as other online consumer products. On May 5, 2022, we acquired GNOG in an
all-stock transaction to enable us to leverage Golden Nugget's established brand
to broaden our reach into new customer segments and enhance the combined
company's iGaming product offerings through our vertically-integrated tech stack
and GNOG's unique capabilities, including live dealer. For further details
regarding the GNOG Transaction, please see the section entitled "Acquisition of
Golden Nugget Online Gaming, Inc." contained within Note 3 of our condensed
consolidated financial statements.

Our mission is to make life more exciting by responsibly creating the world's
favorite real-money games and betting experiences. We accomplish this by
creating an environment where our users can find enjoyment and fulfillment
through Sportsbook, iGaming and DFS, as well as media and other online consumer
products. We are also highly focused on our responsibility as a steward of this
new era in real-money gaming. Our ethics guide our decision making, with respect
to both the tradition and integrity of sports and our investments in regulatory
compliance and consumer protection.

We make deliberate and substantial investments in support of our mission and
long-term growth. For example, we have invested in our products and technology
in order to continuously launch new product innovations, improve marketing,
merchandising, and operational efficiency through data science, and deliver a
great user experience. We also make significant investments in sales and
marketing and incentives to grow and retain our paid user base, including
personalized cross-product offers and promotions, and promote brand awareness to
attract the "skin-in-the-game" sports fan. Together, these investments have
enabled us to create a leading product built on scalable technology, while
attracting a user base that has resulted in the rapid growth of our business.

Our priorities are to (a) continue to invest in our products and services, (b)
launch our products in new geographies, (c) create replicable and predictable
state-level unit economics in sports betting and iGaming and (d) expand our
other online consumer products. When we launch Sportsbook and iGaming offerings
in a new jurisdiction, we invest in user acquisition, retention and
cross-selling until the new jurisdiction provides a critical mass of users
engaged across our products.

Our current technology is highly scalable with relatively minimal incremental
spend required to launch our products in new jurisdictions. We will continue to
manage our fixed-cost base in conjunction with our market entry plans and focus
our variable spend on marketing, user experience and support and regulatory
compliance to become the product of choice for users and maintain favorable
relationships with regulators. We also expect to improve our profitability over
time through cost synergies and new opportunities driven by the continued
optimization of our technology infrastructure.

Our path to profitability is based on the acceleration of positive contribution
profit growth driven primarily by marketing efficiencies as we continue the
transition from local to regional to national advertising as well as scale
benefits from investments in our product and technology and general and
administrative functions. On a consolidated Adjusted EBITDA basis, we expect to
achieve profitability when total contribution profit exceeds the fixed costs of
our business, which depends, in part, on the percentage of the U.S. adult
population that has access to our products and the other factors summarized in
the section entitled "Forward-Looking Statements".

Basis of Presentation

We operate two complementary business segments: our business-to-consumer ("B2C") business and our business-to-business ("B2B") business.

B2C



Our B2C business is comprised of the legacy business of DK Crown Holdings Inc.
(formerly DraftKings Inc.), a Delaware corporation ("DK DE"), which includes our
DraftKings-branded Sportsbook, iGaming and DFS products, as well as our other
online consumer products, and our GNOG brand. Across our DraftKings-branded
products, we offer users a single integrated product that provides one account,
one wallet, a centralized payment system and responsible gaming controls.
Currently, we operate our B2C segment primarily in the United States.

                                       29
--------------------------------------------------------------------------------

B2B



Our B2B business is primarily comprised of the operations of SBTech, which we
acquired on April 23, 2020. Our B2B segment's principal activities involve the
design and development of sports betting and casino gaming software. Our B2B
services are delivered through our proprietary software, and our complementary
service offerings include trading and risk management and support for reporting,
customer management and regulatory reporting requirements. The operations of our
B2B segment are concentrated mainly in Europe and the United States.

Impact of COVID-19



Beginning in 2020 and continuing into 2022, the novel coronavirus ("COVID-19")
pandemic has adversely impacted global commercial activity, disrupted supply
chains and contributed to significant volatility in financial markets. The
primary impacts of the COVID-19 pandemic on us were the suspension,
cancellation, rescheduling and shortening of sports seasons and sporting events,
particularly between March 2020 and July 2020, when many sports seasons and
sporting events, including the MLB regular season, domestic soccer leagues and
European Cup competitions, the NBA regular season and playoffs, the NCAA college
basketball tournament, the Masters golf tournament, and the NHL regular season
and playoffs, were suspended or cancelled. The suspension of sports seasons and
sporting events reduced customers' use of, and spending on, our Sportsbook and
DFS products.

Beginning in July 2020, major professional sports leagues started to resume
their activities, many of which with shortened seasons, and gradually resumed
regular activities. In the six months ended June 30, 2022, sports seasons
continued and sporting events were held as planned, including the NFL regular
season, the NFL Playoffs and Superbowl LVI, the NBA regular season and playoffs,
the NHL regular season and playoffs, the NASCAR Cup Series, various NCAA
football bowl games, the NCAA college basketball regular season and tournament,
the MLB regular season and several golf tournaments. The continued return of
major sports and sporting events generated significant user interest and
activity in our Sportsbook and DFS products. However, the possibility remains
that sports seasons and sporting events may be suspended, cancelled, rescheduled
or shortened due to COVID-19 outbreaks.

Our revenue varies based on sports seasons and sporting events amongst other
factors, and cancellations, suspensions or alterations resulting from COVID-19
have the potential to adversely affect our revenue, possibly materially.
However, our products that do not rely on sports seasons and sporting events,
such as iGaming, may partially offset this adverse impact on revenue.

A significant or prolonged decrease in consumer spending on entertainment or
leisure activities would also likely have an adverse effect on demand for our
products, reducing cash flows and revenues, and thereby materially harming our
business, financial condition and results of operations. In addition, a
materially disruptive resurgence of COVID-19 cases or the emergence of
additional variants or strains of COVID-19 could cause other widespread or more
severe impacts depending on where infection rates are highest. As steps taken to
mitigate the spread of COVID-19 necessitated a shift away from a traditional
office environment for many employees, we implemented business continuity
programs to ensure that employees were safe and that our business continued to
function with minimal disruptions to normal work operations while employees
worked remotely. During the second quarter of 2022, our primary offices,
including our corporate headquarters in Boston, Massachusetts, re-opened with
many of our employees returning to work onsite in various capacities. We will
continue to monitor developments relating to disruptions and uncertainties
caused by COVID-19.

Financial Highlights and Trends

The following table sets forth a summary of our financial results for the periods indicated:



                                                       Three months ended June 30,                 Six months ended June 30,
(amounts in thousands)                                   2022                  2021                 2022                  2021
Revenue                                            $      466,185          $ 297,605          $      883,390          $ 609,881
Net Loss                                                 (217,103)          (305,526)               (684,796)          (651,870)
Adjusted EBITDA (1)                                      (118,134)           (95,302)               (407,643)          (234,564)




(1)Adjusted EBITDA is a non-GAAP financial measure. See "-Non-GAAP Information"
below for additional information about this measure and a reconciliation of this
measure to the most directly comparable financial measure calculated in
accordance with U.S. GAAP.

                                       30
--------------------------------------------------------------------------------

Revenue increased by $168.6 million in the three months ended June 30, 2022
compared to the three months ended June 30, 2021 primarily due to the strong
performance of our B2C segment as a result of robust customer acquisition and
retention and the successful launches of our Sportsbook and iGaming products in
additional jurisdictions since the second quarter of 2021.

Revenue increased by $273.5 million in the six months ended June 30, 2022
compared to the six months ended June 30, 2021 primarily due to the strong
performance of our B2C segment as a result of robust customer acquisition and
retention and the successful launches of our Sportsbook and iGaming products in
additional jurisdictions since the second quarter of 2021. These increases were
partially offset by an increase in promotional intensity (primarily due to the
launch of our Sportsbook product in New York), as well as atypically low hold
rates (primarily attributable to NCAA basketball wagering) in the three months
ended March 31, 2022.

Key Performance Indicators - B2C Operations

Monthly Unique Payers ("MUPs"). MUPs is the average number of unique paid users ("unique payers") that use our B2C products on a monthly basis.



MUPs is a key indicator of the scale of our B2C user base and awareness of our
brand. We believe that year-over-year MUPs is also generally indicative of the
long-term revenue growth potential of our B2C segment, although MUPs in
individual periods may be less indicative of our longer-term expectations. We
expect the number of MUPs to grow as we attract, retain and re-engage users in
new and existing jurisdictions and expand our products to appeal to a wider
audience.

We define MUPs as the number of unique payers per month who had a paid
engagement (i.e., participated in a real-money engagement with one of our B2C
products such as a DFS contest, sports bet or casino game) across one or more of
our products via our technology. For reported periods longer than one month, we
average the MUPs for the months in the reported period.

A "unique paid user" or "unique payer" is any person who had one or more paid
engagements via our B2C technology during the period (i.e., a user that
participates in a paid engagement with one of our B2C products counts as a
single unique paid user or unique payer for the period). We exclude users who
have made a deposit but have not yet had a paid engagement. Unique payers or
unique paid users include users who have participated in a paid engagement with
only promotional incentives, which are fungible with other funds deposited into
their wallets on our technology; however, the number of such users has not been
material to date.

The chart below presents our MUPs for the three and six months ended June 30,
2021 and 2022:

                    [[Image Removed: dkng-20220630_g2.jpg]]

                                       31

--------------------------------------------------------------------------------

                    [[Image Removed: dkng-20220630_g3.jpg]]

Average Revenue per MUP ("ARPMUP"). ARPMUP is the average B2C segment revenue
per MUP, and this key metric represents our ability to drive usage and
monetization of our B2C products. The chart below presents our ARPMUP for the
three and six months ended June 30, 2021 and 2022:

                    [[Image Removed: dkng-20220630_g4.jpg]]

                                       32
--------------------------------------------------------------------------------

                    [[Image Removed: dkng-20220630_g5.jpg]]

We define and calculate ARPMUP as the average monthly B2C segment revenue for a
reporting period, divided by MUPs (i.e., the average number of unique payers)
for the same period.

Our period-on-period increase in MUPs for the three and six months ended June 30, 2022, compared to the same periods in 2021, reflects strong unique payer retention and acquisition across our Sportsbook and iGaming products, as well as the expansion of our iGaming and Sportsbook products into new jurisdictions, partially offset by a decline in DFS MUPs.



ARPMUP increased in the three months ended June 30, 2022, compared to the same
period in 2021, primarily due to strong customer engagement, a continued mix
shift into our iGaming and Sportsbook products and reduced promotional intensity
compared to the same period in 2021.

ARPMUP increased in the six months ended June 30, 2022, compared to the same
period in 2021, primarily due to strong customer engagement and a continued mix
shift into our iGaming and Sportsbook products, which was partially offset by an
increase in promotional intensity (primarily due to the launch of our Sportsbook
product in New York), as well as atypically low hold rates in the three months
ended March 31, 2022 (primarily attributable to NCAA basketball wagering).

Non-GAAP Information



This Report includes Adjusted EBITDA, which is a non-GAAP financial measure that
we use to supplement our results presented in accordance with U.S. GAAP. We
believe Adjusted EBITDA is useful in evaluating our operating performance,
similar to measures reported by our publicly-listed U.S. competitors, and
regularly used by security analysts, institutional investors and other
interested parties in analyzing operating performance and prospects. Adjusted
EBITDA is not intended to be a substitute for any U.S. GAAP financial measure.
As calculated, it may not be comparable to other similarly titled measures of
performance of other companies in other industries or within the same industry.

We define and calculate Adjusted EBITDA as net loss before the impact of
interest income or expense (net), income tax provision or benefit, and
depreciation and amortization, and further adjusted for the following items:
stock-based compensation, transaction-related costs, litigation, settlement and
related costs, advocacy and other related legal expenses, gain or loss on
remeasurement of warrant liabilities and other non-recurring and non-operating
costs or income, as described in the reconciliation below.

We include non-GAAP financial measures because they are used by management to
evaluate our core operating performance and trends and to make strategic
decisions regarding the allocation of capital and new investments. Adjusted
EBITDA excludes certain expenses that are required in accordance with U.S. GAAP
because they are non-recurring items (for example, in the case of
transaction-related costs and advocacy and other related legal expenses),
non-cash expenditures (for example, in the case of depreciation and
amortization, remeasurement of warrant liabilities and stock-based
compensation), or
                                       33
--------------------------------------------------------------------------------

non-operating items which are not related to our underlying business performance (for example, in the case of interest income and expense and litigation, settlement and related costs).

Adjusted EBITDA



The table below presents our Adjusted EBITDA reconciled to our net loss, which
is the most directly comparable financial measure calculated in accordance with
U.S. GAAP, for the periods indicated:

                                                      Three months ended June 30,                     Six months ended June 30,
(amounts in thousands)                                  2022                  2021                    2022                    2021
Net loss                                         $      (217,103)         $ (305,526)         $     (684,796)             $ (651,870)
Adjusted for:
Depreciation and amortization (1)                         42,315              30,051                  74,540                  58,244
Interest income, net                                      (1,929)             (1,642)                 (2,077)                 (2,627)
Income tax (benefit) provision                           (81,226)              2,404                 (80,757)                 (2,191)
Stock-based compensation (2)                             135,521             171,739                 322,598                 323,582
Transaction-related costs (3)                             10,505               7,890                  14,279                  10,913
Litigation, settlement, and related costs (4)              2,446               3,599                   4,396                   4,221
Advocacy and other related legal expenses (5)                  -              11,035                       -                  11,035
(Gain) loss on remeasurement of warrant
liabilities                                              (14,315)            (16,984)                (26,996)                  9,996
Other non-recurring and non-operating costs
(income) (6)                                               5,652               2,132                 (28,830)                  4,133
Adjusted EBITDA                                  $      (118,134)         $  (95,302)         $     (407,643)             $ (234,564)
Adjusted EBITDA by segment:
B2B                                              $       (19,230)         $   (3,043)         $      (39,568)             $     (951)
B2C                                              $       (98,904)         $  (92,259)         $     (368,075)             $ (233,613)




(1)The amounts include the amortization of acquired intangible assets of $27.1
million and $20.6 million for the three months ended June 30, 2022 and 2021,
respectively, and $46.3 million and $39.7 million for the six months ended June
30, 2022 and 2021, respectively.
(2)Primarily reflects stock-based compensation expenses resulting from the
issuance of awards under long-term incentive plans.
(3)Includes capital markets advisory, consulting, accounting and legal expenses
related to evaluation, negotiation and integration costs incurred in connection
with pending or completed transactions and offerings.
(4)Primarily includes external legal costs related to litigation and litigation
settlement costs deemed unrelated to our core business operations.
(5)Includes certain non-recurring costs relating to advocacy efforts and other
legal expenses in jurisdictions where we do not operate certain products and are
actively seeking licensure, or similar approval, for those products. For the
three and six months ended June 30, 2021, those costs primarily related to our
activities in Florida. The amounts presented exclude other costs relating to
advocacy efforts and other legal expenses incurred in jurisdictions where
related legislation has been passed and we currently operate.
(6)Primarily includes the change in fair value of certain financial assets, as
well as our equity method share of the investee's losses and other costs
relating to non-recurring and non-operating items.

Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG's operations prior to the closing date of May 5, 2022.


                                       34
--------------------------------------------------------------------------------

Results of Operations

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

The following table sets forth a summary of our consolidated results of operations for the interim periods indicated, and the changes between periods. Due to the timing of the consummation of the GNOG Transaction, the below periods, to the extent applicable, exclude GNOG's operations prior to the closing date of May 5, 2022.



                                                                           Three months ended June 30,
(amounts in thousands, except percentages)            2022                2021              $ Change              % Change
Revenue                                           $  466,185          $  297,605          $ 168,580                     56.6  %
Cost of revenue                                      312,767             187,006           (125,761)                   (67.2) %
Sales and marketing                                  197,529             170,712            (26,817)                   (15.7) %
Product and technology                                77,202              62,635            (14,567)                   (23.3) %
General and administrative                           187,609             198,806             11,197                      5.6  %
Loss from operations                                (308,922)           (321,554)            12,632                      3.9  %
Interest income, net                                   1,929               1,642                287                     17.5  %
Gain on remeasurement of warrant liabilities          14,315              16,984             (2,669)                   (15.7) %
Other expense, net                                    (5,573)                  -             (5,573)                  (100.0) %
Loss before income tax (benefit) provision and
loss from equity method investment                  (298,251)           (302,928)             4,677                      1.5  %
Income tax (benefit) provision                       (81,226)              2,404             83,630                 (3,478.8) %
Loss from equity method investment                        78                 194                116                     59.8  %
Net loss                                          $ (217,103)         $ (305,526)         $  88,423                     28.9  %



Revenue. Revenue increased $168.6 million, or 56.6%, to $466.2 million in the
three months ended June 30, 2022, from $297.6 million in the three months ended
June 30, 2021. The increase was attributable to $184.5 million in incremental
B2C segment revenue, partially offset by a decrease in B2B segment revenue of
$16.0 million.

The $184.5 million increase in our B2C segment revenue was primarily
attributable to our online gaming revenues which increased $175.9 million, or
68.1%, to $434.1 million in the three months ended June 30, 2022, from $258.2
million in the three months ended June 30, 2021. The remaining increase in our
B2C segment revenue was attributable to "Other" revenue, which primarily
includes media, Marketplace and retail Sportsbooks.

Online gaming revenue grew in the three months ended June 30, 2022 primarily due
to MUPs increasing by 29.7% and ARPMUP also increasing by 29.7% as compared to
the three months ended June 30, 2021. These key performance indicators increased
primarily due to strong customer engagement, a continued mix shift into our
iGaming and Sportsbook products and reduced promotional intensity compared to
the same period in 2021.

Cost of Revenue. Cost of revenue increased $125.8 million, or 67.2%, to $312.8
million in the three months ended June 30, 2022, from $187.0 million in the
three months ended June 30, 2021. Our B2C segment accounted for substantially
all of this increase, reflecting growth in revenue from our expanded product and
geographic footprint, including the launch of our Sportsbook product in Arizona,
Connecticut, Louisiana, New York and Ontario, Canada and the launch of our
iGaming product in Connecticut and Ontario, Canada since the three months ended
June 30, 2021. The cost of revenue increase was primarily attributable to an
increase in our variable expenses such as product taxes and payment processing
fees, which increased by $65.8 million and $16.7 million, respectively, relative
to the expenses incurred during the three months ended June 30, 2021. The
remaining increase was primarily attributable to variable platform costs and
revenue share arrangements resulting from additional customer activity.

B2C segment cost of revenue as a percentage of B2C revenue increased by
5.4 percentage points to 62.1% in the three months ended June 30, 2022, as
compared to 56.7% in the three months ended June 30, 2021, reflecting our
changed revenue mix from our more mature DFS product to our iGaming and
Sportsbook products as well as higher promotional investment in the launches of
our products in new states, principally the launch of our Sportsbook product in
New York in January 2022. In addition, as a result of customer activity in these
new states, we incurred variable expenses that are not based on net revenue,
including payment processing fees, and revenue share arrangements. In general,
our iGaming and Sportsbook products produce revenue at a higher cost per revenue
dollar relative to our more mature DFS product.

                                       35
--------------------------------------------------------------------------------

Sales and Marketing. Sales and marketing expense increased $26.8 million, or
15.7%, to $197.5 million in the three months ended June 30, 2022, from $170.7
million in the three months ended June 30, 2021. Our B2C segment accounted for
substantially all of this increase. Of the $26.8 million increase, $21.7 million
resulted from activities to acquire and retain players in new states that we
operate in, such as marketing costs including advertising and the development of
marketing campaigns, as well as headcount and technology associated with
analyzing, developing and deploying those campaigns. The remainder of the
increase primarily resulted from an increase in various team and league
sponsorships.

Product and Technology. Product and technology expense increased $14.6 million,
or 23.3%, to $77.2 million in the three months ended June 30, 2022, from $62.6
million in the three months ended June 30, 2021, of which $1.3 million was
attributable to our B2B segment. The remaining increase of $13.3 million
primarily reflects additions to our product operations and engineering headcount
in our B2C segment.

General and Administrative. General and administrative expense decreased $11.2
million, or 5.6%, to $187.6 million in the three months ended June 30, 2022,
from $198.8 million in the three months ended June 30, 2021. Our B2C segment
accounted for substantially all of this decrease, primarily driven by a decrease
in stock-based compensation expense of $32.8 million, which was partially offset
by an increase of $17.2 million in compensation costs due to an increase in
headcount.

Gain on Remeasurement of Warrant Liabilities. We recorded a gain on
remeasurement of warrant liabilities of $14.3 million in the three months ended
June 30, 2022, compared to a gain of $17.0 million in the three months ended
June 30, 2021 primarily due to changes in the underlying share price of our
Class A common stock.

Other Expense. Other expense, net was $5.6 million in the three months ended
June 30, 2022, as compared to no other expense, net in the three months ended
June 30, 2021. This increase was primarily attributable to a change in the fair
value of certain financial assets.

Income tax (benefit) provision. We recorded an income tax benefit of $81.2
million in the three months ended June 30, 2022, as compared to an income tax
provision of $2.4 million in the three months ended June 30, 2021. This increase
was primarily due to a discrete income tax benefit of $76.8 million recorded
during the second quarter of 2022, which was attributable to non-recurring
partial releases of the Company's U.S. valuation allowance as a result of the
preliminary purchase accounting for GNOG.

Net Loss. Net loss decreased by $88.4 million to $217.1 million in the three
months ended June 30, 2022, as compared to a net loss of $305.5 million in the
three months ended June 30, 2021, for the reasons discussed above.

                                       36
--------------------------------------------------------------------------------

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

The following table sets forth a summary of our consolidated results of operations for the interim periods indicated, and the changes between periods. Due to the timing of the consummation of the GNOG Transaction, the below periods, to the extent applicable, exclude GNOG's operations prior to the closing date of May 5, 2022.



                                                                           Six months ended June 30,
(amounts in thousands, except percentages)            2022                2021              $ Change             % Change
Revenue                                           $  883,390          $  609,881          $ 273,509                    44.8  %
Cost of revenue                                      626,146             370,231           (255,915)                  (69.1) %
Sales and marketing                                  518,981             399,398           (119,583)                  (29.9) %
Product and technology                               158,554             118,794            (39,760)                  (33.5) %
General and administrative                           404,215             367,803            (36,412)                   (9.9) %
Loss from operations                                (824,506)           (646,345)          (178,161)                  (27.6) %
Interest income, net                                   2,077               2,627               (550)                  (20.9) %
Gain (loss) on remeasurement of warrant
liabilities                                           26,996              (9,996)            36,992                   370.1  %
Other income, net                                     32,309                   -             32,309                   100.0  %
Loss before income tax (benefit) provision and
loss from equity method investment                  (763,124)           (653,714)          (109,410)                  (16.7) %
Income tax benefit                                   (80,757)             (2,191)            78,566                 3,585.9  %
Loss from equity method investment                     2,429                 347             (2,082)                 (600.0) %
Net loss                                          $ (684,796)         $ (651,870)         $ (32,926)                   (5.1) %



Revenue. Revenue increased $273.5 million, or 44.8%, to $883.4 million in the
six months ended June 30, 2022, from $609.9 million in the six months ended June
30, 2021. The increase was attributable to $307.4 million in incremental B2C
segment revenue, partially offset by a decrease in B2B segment revenue of $33.9
million.

The $307.4 million increase in our B2C segment revenue was primarily
attributable to our online gaming revenues which increased $289.9 million, or
54.6%, to $820.8 million in the six months ended June 30, 2022, from $530.9
million in the six months ended June 30, 2021. The remaining increase in our B2C
segment revenue was attributable to "Other" revenue, which primarily includes
media, Marketplace and retail Sportsbooks.

Online gaming revenue grew in the six months ended June 30, 2022 primarily due
to MUPs increasing by 29.4% and ARPMUP increasing by 19.9% as compared to the
six months ended June 30, 2021. These key performance indicators increased
primarily due to strong customer engagement and a continued mix shift into our
iGaming and Sportsbook products, which was partially offset by an increase in
promotional intensity (primarily due to the launch of our Sportsbook product in
New York), as well as atypically low hold rates in the three months ended March
31, 2022 (primarily attributable to NCAA basketball wagering).

Cost of Revenue. Cost of revenue increased $255.9 million, or 69.1%, to $626.1
million in the six months ended June 30, 2022, from $370.2 million in the six
months ended June 30, 2021. Our B2C segment accounted for substantially all of
this increase, reflecting growth in revenue from our expanded product and
geographic footprint, including the launch of our Sportsbook product in Arizona,
Connecticut, Louisiana, New York and Ontario, Canada and the launch of our
iGaming product in Connecticut and in Ontario, Canada since the six months ended
June 30, 2021. The cost of revenue increase was primarily attributable to an
increase in our variable expenses such as product taxes and payment processing
fees, which increased by $146.2 million and $38.2 million, respectively,
relative to the expenses incurred during the six months ended June 30, 2021. The
remaining increase was primarily attributable to variable platform costs and
revenue share arrangements resulting from additional customer activity.

B2C segment cost of revenue as a percentage of B2C revenue increased by
10.5 percentage points to 65.8% in the six months ended June 30, 2022, as
compared to 55.3% in the six months ended June 30, 2021, reflecting our changed
revenue mix from our more mature DFS product to our iGaming and Sportsbook
products as well as higher promotional investment in the launches of our
products in new states, principally the launch of our Sportsbook product in New
York. In addition, as a result of customer activity in these new states, we
incurred variable expenses that are not based on net revenue, including payment
processing fees, and revenue share arrangements. In general, our iGaming and
Sportsbook products produce revenue at a higher cost per revenue dollar relative
to our more mature DFS product.
                                       37
--------------------------------------------------------------------------------


Sales and Marketing. Sales and marketing expense increased $119.6 million, or
29.9%, to $519.0 million in the six months ended June 30, 2022, from $399.4
million in the six months ended June 30, 2021. Our B2C segment accounted for
substantially all of this increase with $94.1 million of the increase resulting
from activities to acquire and retain players in new states that we operate in,
such as marketing costs including advertising and the development of marketing
campaigns, as well as headcount and technology associated with analyzing,
developing and deploying those campaigns. The remainder of the increase
primarily resulted from an increase in various team and league sponsorships.

Product and Technology. Product and technology expense increased $39.8 million,
or 33.5%, to $158.6 million in the six months ended June 30, 2022, from $118.8
million in the six months ended June 30, 2021, of which $6.6 million was
attributable to our B2B segment. The remaining increase of $33.2 million
primarily reflects additions to our product operations and engineering headcount
in our B2C segment.

General and Administrative. General and administrative expense increased $36.4
million, or 9.9%, to $404.2 million in the six months ended June 30, 2022, from
$367.8 million in the six months ended June 30, 2021. Our B2C segment accounted
for substantially all of this increase, primarily driven by an increase of
$29.7 million in compensation costs due to an increase in headcount, as well as
an increase in software and facility fees, which were partially offset by a
decrease in stock-based compensation expense of $10.2 million.

Gain (Loss) on Remeasurement of Warrant Liabilities. We recorded a gain on
remeasurement of warrant liabilities of $27.0 million in the six months ended
June 30, 2022, compared to a loss of $10.0 million in the six months ended June
30, 2021 primarily due to changes in the underlying share price of our Class A
common stock.

Other Income. Other income, net was $32.3 million in the six months ended June
30, 2022, as compared to no other income, net in the six months ended June 30,
2021. This increase was primarily attributable to a change in the fair value of
certain financial assets.

Income tax benefit. We recorded an income tax benefit of $80.8 million in the
six months ended June 30, 2022, as compared to an income tax benefit of $2.2
million in the six months ended June 30, 2021. This increase was primarily due
to a discrete income tax benefit of $76.8 million recorded during the second
quarter of 2022, which was attributable to non-recurring partial releases of the
Company's U.S. valuation allowance as a result of the preliminary purchase
accounting for GNOG.

Net Loss. Net loss increased by $32.9 million to $684.8 million in the six months ended June 30, 2022, as compared to a net loss of $651.9 million in the six months ended June 30, 2021, for the reasons discussed above.

Liquidity and Capital Resources



We had $1.5 billion in cash and cash equivalents as of June 30, 2022 (excluding
player cash, which we segregate from our operating cash balances on behalf of
our paid users for all jurisdictions and products). We believe our cash on hand
is sufficient to meet our current working capital and capital expenditure
requirements for a period of at least twelve months. We will continue to
evaluate our long-term operating performance and cash needs and believe we are
well positioned to continue to fund the operations of the business long-term.

Debt. In March 2021, we issued zero-coupon convertible senior notes in an
aggregate principal amount of $1,265.0 million. The Convertible Notes mature on
March 15, 2028, subject to earlier conversion, redemption or repurchase. In
connection with the pricing of the Convertible Notes and the exercise of the
option to purchase additional Convertible Notes, we entered into privately
negotiated Capped Call Transactions. The Capped Call Transactions are expected
generally to reduce potential dilution to our Class A common stock upon any
conversion of the Convertible Notes. The net cost of $124.0 million incurred to
enter into the Capped Call Transactions was recorded as a reduction to
additional paid-in capital on the Company's consolidated balance sheet.

Leases. We have lease arrangements for certain corporate office facilities, data centers, and motor vehicles. As of June 30, 2022, the Company had lease obligations of $83.9 million, with $5.7 million payable within 12 months.



Other Purchase Obligations. We have certain non-cancelable contracts with
vendors, licensors and others requiring us to make future cash payments. As of
June 30, 2022, these purchase obligations were $1,913.5 million, with $267.7
million payable in the remainder of 2022.

                                       38
--------------------------------------------------------------------------------

Cash Flows



The table below summarizes our cash flows for the periods indicated. Due to the
timing of the consummation of the GNOG Transaction, the below periods, to the
extent applicable, exclude GNOG's operations prior to the closing date of May 5,
2022.

                                                                        Six months ended June 30,
(amounts in thousands)                                                  2022                   2021
Net cash used in operating activities                             $     (529,303)         $  (176,375)
Net cash used in investing activities                                   (147,468)            (100,579)
Net cash (used in) provided by financing activities                      (12,531)           1,131,911

Effect of foreign exchange rates on cash and cash equivalents and restricted cash

                                                                -                  824

Net (decrease) increase in cash and cash equivalents and restricted cash

                                                         (689,302)             855,781

Cash and cash equivalents and restricted cash at beginning of period

                                                                 2,629,842            2,104,976

Cash and cash equivalents and restricted cash at end of period $ 1,940,540 $ 2,960,757




Operating Activities. Net cash used in operating activities in the six months
ended June 30, 2022 was $529.3 million, compared to $176.4 million in the six
months ended June 30, 2021, mainly reflecting a decrease in operating working
capital of $199.0 million primarily due to an increase in cash used in accounts
payable, accrued expenses, liabilities to users, prepaid expenses and other
current assets. In addition, we incurred a $32.9 million higher net loss, for
the reasons discussed above, net of non-cash cost items. Non-cash cost items
decreased $121.0 million period-over-period, primarily driven by deferred income
taxes, a gain on remeasurement of warrants liabilities and a gain on various
financial assets.

Investing Activities. Net cash used in investing activities during the six
months ended June 30, 2022 increased by $46.9 million to $147.5 million from
$100.6 million during the same period in 2021, mainly reflecting an increase in
cash paid for acquisitions during the six months ended June 30, 2022 when
compared to the six months ended June 30, 2021.

Financing Activities. Net cash provided by (used in) financing activities during
the six months ended June 30, 2022 decreased by $1,144.4 million to $(12.5)
million from $1,131.9 million during the same period in 2021, mainly reflecting
the completion of our issuance of Convertible Notes during the three months
ended March 31, 2021.

Commitments and Contingencies

Refer to Note 13 of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments as of June 30, 2022.

Critical Accounting Policies



Our financial statements have been prepared in accordance with U.S. GAAP. Our
discussion and analysis of the financial condition and results of operations are
based on these financial statements. The preparation of these financial
statements requires the application of accounting policies in addition to
certain estimates and judgments by our management. Our estimates and judgments
are based on currently available information, historical results and other
assumptions we believe are reasonable. Actual results could differ materially
from these estimates.

During the six months ended June 30, 2022, there were no changes to the critical accounting policies discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 18, 2022.

© Edgar Online, source Glimpses