DraftKings : Q3 2020 Presentation

Q3 2020 EARNINGS PRESENTATION

NOVEMBER 13, 2020

L E G A L D I S C L A I M E R

Forward-Looking Statements and Non-GAAP Financial Measures

This presentation, and the accompanying oral presentation, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this presentation, including statements regarding guidance, our future results of operations or financial condition, business strategy and plans, user growth and engagement, product initiatives, and objectives of management for future operations, and the impact of COVID-19 on our business and the economy as a whole, are forward-looking statements.

In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "forecast," "going to," "intend," "may," "plan," "potential," "predict," "project," "propose", "should," "target," "will," or "would" or the negative of these words or other similar terms or expressions. We caution you that the foregoing may not include all of the forward- looking statements made in this presentation.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this presentation on our current expectations and projections about future events and trends, including the ongoing COVID-19 pandemic, that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are subject to risks, uncertainties, and other factors, including those described in our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 15, 2020 and our Quarterly Report on Form 10-Q, filed with the SEC on November 13, 2020, which are available on the SEC's website at www.sec.gov. Additional information and "Risk Factors" are available in other filings that we make from time to time with the SEC.

In addition, the forward-looking statements in this presentation relate only to events as of the date on which the statements are made and are based on information available to us as of the date of this presentation. We undertake no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect new information or the occurrence of unanticipated events, including future developments related to the COVID-19 pandemic, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions or investments.

This presentation includes certain non-GAAP financial measures. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"). A reconciliation of GAAP to non-GAAP is provided in the appendix of this presentation.

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Q 3 A N D C U R R E N T B U S I N E S S H I G H L I G H T S

1	$133M of revenue driven by customer
acquisition and return of major sports

42%	1 million+
YoY pro forma revenue	MUPs in Q3,
growth(1)	increasing 64% YoY

2	Grew industry-leading OSB footprint, largest	Launched	Live
of any online operator in the U.S.	OSB in Illinois and	In 10 states for Online Sports
Betting accounting for 20% of
		Tennessee	U.S. population(2)
3	Continued to establish DraftKings as a top	Record iGaming GGR	#1
iGaming brand	For NJ market, even with the return of	Online Casino Brand in NJ
		major sports(3)	by GGR for September(4)

Completed follow-on equity offering to bolster balance	$1BN+
4 sheet and facilitate organized lock-up expiration
	Primary Capital Raised

1. Year over year Q3 pro forma revenue includes SBTech in Q3 2019 for like-for-like comparison.
2. DraftKings is currently live in Colorado, Illinois, Indiana, Iowa, New Hampshire, New Jersey, Oregon, Pennsylvania, Tennessee, and West Virginia.
3. For the Q3 2020 period. Refer to slide 4 for further details on NJ iGaming GGR.
4. Measured on a gross gaming revenue "GGR" basis for September 2020. Eilers & Krejcik U.S. Online Casino Tracker, October 2020.

Diversified

Shareholder Base

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U N I Q U E T I M E F O R A T T R A C T I V E C U S T O M E R A C Q U I S I T I O N

F A V O R A B L E N E A R - T E R M S P O R T S C A L E N D A R

• Pent up demand from suspension of major sports and heavy H2 sports calendar are key drivers of unique customer acquisition opportunity
• Stay-at-homenature of COVID is driving increased response rates to advertising spend
• Recent CAC better than expectations, even with scaled-up customer acquisition spend

ONE-OF-A-KIND, CONDENSED SPORTS CALENDAR IN H2 2020

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I G A M I N G M A R K E T G R O W I N G R A P I D L Y E V E N W I T H T H E R E T U R N O F M A J O R S P O R T S

DRAFTKINGS' iGAMING UPDATE

• In terms of GGR share, DKNG was a top 2 iGaming operator in NJ, PA, and WV in September 2020(1)
• MI has legalized iGaming and launch expected in early 2021
• OSB and iGaming are proving to be complimentary product offerings with NJ iGaming setting GGR records for three straight months, even with the return of major sports

NJ iGAMING MARKET SIZE(1)

(GGR, $ in millions)

iGaming hits and maintains all-time highs with return of major sports

$44 $48 $48 $53 $50

$75 $81 $81 $83 $85 $85

$61

Oct-19

Nov-19

Dec-19

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Jun-20

Jul-20

Aug-20

Sep-20

YoY mkt growth:	74%	88%	75%	68%	68%	64%	114%
YoY Resorts	243%	245%	203%	95%	96%	57%	114%
license growth(2):

Source: NJ Division of Gaming Enforcement.

1. Eilers & Krejcik U.S. Online Casino Tracker, October 2020.
2. Online casino only, does not include poker.
3. Resorts Digital license; license includes DraftKings, FoxBet, Resorts Casino, and Mohegan Sun iGaming offerings.

123%	124%	121%	115%	115%
119%	150%	170%	147%	128%

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8 0 % O F D K N G C O M M O N S H A R E S A R E A L R E A D Y U N L O C K E D

◼

A

◼B

Section 16 Officers and certain DKNG Directors' common shares, includes 6mm of vested LTIP RSUs after net settlement for taxes

October secondary offering participants' remaining locked-up shares

• ~95% of locked up shares are held by affiliates of certain DKNG Directors and subject to blackout restrictions until Q4 earnings at the earliest

◼C Vested and unexercised options and warrants (37mm total and 34mm @ Treasury Stock Method ("TSM"))

• ~1/3 of which are already unlocked
• ~2/3 of which are held by Section 16 Officers and Certain DKNG Directors and will be unlocked after November 20th

SHARES UNLOCKING BRIDGE

392mm

314mm

		A		B
		14mm
				64mm
Common Shares	Already Unlocked	Unlock After		Unlock After
Outstanding	Common Shares	Nov. 20th		Jan. 4th

C		Vested Options and Warrants	~11mm	~23mm	~0mm
	(On TSM basis)
	Note: Numbers are rounded to the nearest million.			| 5

APPENDIX

O V E R V I E W O F O S B R E P O R T I N G M E T H O D O L O G I E S

	NJ	WV	IN	PA	NH	IA	CO	IL	OR
Reporting Day of Month	~12th	Weekly	~10th	~17th	~23rd	~10th		TBD	~20th
Handle
Total Industry
By License					NA				NA
By Operator					NA				NA
Promo
Total Industry
By License					NA				NA
By Operator					NA				NA
GGR(1)
Total Industry
By License					NA				NA
By Operator					NA				NA
Accounting Method(2)	Cash	Cash	Cash	Cash	Accrual	Cash	Cash	Accrual	Cash

Yes

No

1. GGR is taxable revenue as defined by each state.

(2)	"Cash" accounting measures handle, GGR, and promo as wagers are placed and settled (i.e. paid out), while "Accrual" accounting measures handle, GGR, and promo as	|	7
	events relating to wagers are completed.

R E C O N C I L I A T I O N O F G A A P O P E R A T I N G E X P E N S E S T O N O N - G A A P O P E R A T I N G E X P E N S E S

($ in millions)

		9/30/2020	6/30/2020	3/31/2020	9/30/2019	6/30/2019	3/31/2019
GAAP Operating Expenses
Cost of Revenue		$97	$47	$43	$25	$18	$22
Sales and Marketing		$203	$46	$54	$58	$30	$37
General and Administrative		$127	$107(1)	$39(1)	$25	$26	$27
Product and Technology		$54	$31	$18	$14	$12	$13
Total GAAP Operating Expenses		$481	$231	$155	$123	$86	$98
Pro-Forma Operating Expense Adjustments
Cost of Revenue			$6	$25	$24	$24	$24
Sales and Marketing			$1	$4	$1	$2	$4
General and Administrateive			$9	$5	$3	$4	$3
Product and Technology			$6	$12	$10	$9	$9
Total Pro-Forma Operating Expense Adjustments		$0	$22	$46	$38	$39	$40
Non-GAAP Operating Expense Adjustments
Cost of Revenue	(a)	($0)	($0)	$0	$0	$0	$0
	(b)	($19)	($18)	($18)	($18)	($18)	($18)
	(d)	($6)	($4)	($4)	($2)	($2)	($2)
Sales and Marketing	(a)	($12)	($3)	($0)	($0)	($0)	($0)
	(d)	($0)	($0)	($0)	($1)	($0)	($0)
General and Administrative	(a)	($83)	($54)	($4)	($2)	($2)	($4)
	(c)	($4)	($25)(1)	($6)(1)	($1)	($1)	$0
	(d)	($1)	($1)	($1)	$1	($0)	($1)
	(e)	($2)	($2)	($1)	($1)	($1)	($1)
	(f)	($2)	($3)	($0)	($0)	($0)	($1)
Product and Technology	(a)	($22)	($8)	($0)	($0)	($0)	($1)
	(d)	($1)	($1)	($1)	($2)	($1)	($0)
Total Non-GAAP Operating Expense Adjustments		($151)	($119)	($35)	($26)	($26)	($29)
Adjusted Pro-Forma Operating Expenses
Cost of Revenue		$72	$32	$47	$29	$22	$25
Sales and Marketing		$191	$43	$57	$59	$31	$40
General and Administrative		$36	$33	$33	$24	$25	$23
Product and Technology		$31	$27	$28	$22	$20	$21
Total Adjusted Operating Expenses		$330	$135	$165	$134	$99	$110

1. Stock-basedcompensation expense
2. Amortization of acquired intangible assets
3. Transaction expenses
4. Depreciation & Amortization
5. Litigation

1. Other

1. Pursuant to the principles of Article 11 of Regulation S-X, the transaction costs related to the Business Combination have been eliminated in calculating our Pro-Forma Operating

Expenses in Proforma Adjusted EBITDA tables in our 10Q for the nine months ended September 30, 2020. These costs were approximately $31mm for the nine months ended	|	8
September 30, 2020 and are included in our GAAP Operating Expenses on this page.

N O N - G A A P A D J U S T E D E A R N I N G S P E R S H A R E B U I L D

THREE MONTHS ENDED SEPTEMBER 30, 2020 - ADJUSTED EARNINGS PER SHARE BRIDGE

NINE MONTHS ENDED SEPTEMBER 30, 2020 - ADJUSTED EARNINGS PER SHARE BRIDGE

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P R O F O R M A D R A F T K I N G S P & L A N D A D J U S T E D E B I T D A R E C O N C I L I A T I O N

◼ Pro Forma Adjusted EBITDA

Three months ended September 30,

Nine months ended September 30,

- We define and calculate Pro

Forma Adjusted EBITDA as pro

forma net loss (giving effect to the

Business Combination as if it were

consummated on January 1,

2019) before the impact of interest

income or expense, income tax

expense or benefit and

depreciation and amortization, and

further adjusted for the same

items as Adjusted EBITDA.

		2020
(in thousands, except percentages)		Actual
Revenue	$	132,836
Cost of revenue		(96,569)
Sales and marketing		(203,339)
General and administrative		(127,376)
Product and technology		(53,909)
Loss from operations		(348,357)
Interest income (expense), net		686
Loss before income tax expense		(347,671)
Income tax benefit (expense)		13
Loss from equity method investment		(95)
Net Loss	$	(347,753)
Adjusted for:
Depreciation and amortization
(excluding acquired intangibles)		7,828
Amortization of acquired intangibles		18,767
Interest (income) expense, net		(686)
Income tax (benefit) expense		(13)
Stock-based compensation (1)		117,035
Transaction-related costs (2)		3,585
Litigation, settlement, and related
costs (3)		2,419
Other non-recurring costs and
special project costs (4)		1,645
Other non-operating costs		95
Pro forma Adjusted EBITDA	$	(197,079)

2019

Pro Forma

$ 93,318 (49,295) (59,804) (27,698) (23,954)

(67,433)

497

(66,936)

4,312

-

$ (62,624)

4,087

17,857

(497)

(4,312)

1,981

1,328

710

444

-

$ (41,026)

	2020
	Pro Forma
$	321,279	$
	(218,177)
	(307,530)
	(257,596)
	(120,070)
	(582,094)
	(2,713)
	(584,807)
	(3,904)
	(380)
$	(589,091)	$
	19,102
	54,150
	2,713
	3,904
	187,239
	3,585
	5,771
	4,291
	380
$	(307,956)

2019

Pro Forma

269,259

(137,208)

(131,789)

(88,015)

(67,192)

(154,945)

1,330

(153,615)

13,036

-

(140,579)

11,609

54,134

(1,330)

(13,036)

9,106

2,603

2,411

1,816

-

(73,266)

(1)	The amounts for the three and nine months ended September 30, 2020, primarily reflect stock-based compensation expenses resulting from the issuance of awards under long-term incentive plans and,
	for the nine months ended September 30, 2020, the issuance of our Class B shares (which have no economic or conversion rights) to our CEO, and $10.9 million due to the satisfaction of the
	performance condition, immediately prior to the consummation of the Business Combination, on stock-based compensation awards granted to SBTech employees in prior periods.
(2)	Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions and offerings. The
	transaction costs related to the Business Combination described in footnote 2 on the following page have been eliminated in calculating our pro forma net income for the nine months ended September
	30, 2020 pursuant to the principles of Article 11 of Regulation S-X. In 2019, these costs related to exploratory acquisition activities.
(3)	Includes primarily external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.
(4)	Includes primarily consulting, advisory and other costs relating to non-recurring items and special projects, including, for the three and nine months ended September 30, 2019, the cost of our move to	| 10
	our new Boston headquarters, executive search costs and, for the three and nine months ended September 30, 2020, implementation of internal controls over financial reporting and tax structuring

advisory costs.

D R A F T K I N G S P & L A N D A D J U S T E D E B I T D A R E C O N C I L I A T I O N

• Adjusted EBITDA
• • We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense and depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, litigation, settlement and related costs and certain other non- recurring, non-cash and non-core items, as described in the footnotes to the reconciliation.

(in thousands, except percentages) Revenue Cost of revenue Sales and marketing General and administrative Product and technology Loss from operations Interest income (expense), net Loss before income tax expense Income tax benefit (expense) Loss from equity method investment Net Loss

Adjusted for: Depreciation and amortization (excluding acquired intangibles) Amortization of acquired intangibles Interest (income) expense, net Income tax (benefit) expense Stock-based compensation (1) Transaction-related costs (2) Litigation, settlement, and related costs (3) Other non-recurring costs and special project costs (4) Other non-operating costs Adjusted EBITDA

Three months ended September 30,
	2020		2019
$	132,836	$	67,014
	(96,569)		(25,332)
	(203,339)		(58,351)
	(127,376)		(25,185)
	(53,909)		(14,323)
	(348,357)		(56,177)
	686		277
	(347,671)		(55,900)
	13		(19)
	(95)		-
$	(347,753)	$	(55,919)
	7,828		3,430
	18,767		-
	(686)		(277)
	(13)		19
	117,035		1,844
	3,585		1,328
	2,419		710
	1,645		444
	95		-
$	(197,079)	$	(48,421)

Nine months ended September 30,
	2020		2019
$	292,309	$	192,496
	(187,315)		(64,718)
	(303,233)		(124,867)
	(274,180)		(78,181)
	(102,499)		(39,645)
	(574,918)		(114,915)
	(2,253)		1,364
	(577,171)		(113,551)
	(319)		(35)
	(380)		-
$	(577,870)	$	(113,586)
	17,980		9,629
	31,987		-
	2,253		(1,364)
	319		35
	176,362		8,519
	34,492		2,603
	5,771		2,411
	4,291		1,816
	380		-
$	(304,035)	$	(89,937)

(1)	The amounts for the three and nine months ended September 30, 2020, primarily reflect stock-based compensation expenses resulting from the issuance of awards under long-term incentive plans and,
	for the nine months ended September 30, 2020, the issuance of our Class B shares (which have no economic or conversion rights) to our CEO.
(2)	Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions and offerings, including the
	Business Combination. Also includes bonuses, paid in the second quarter of 2020, to certain employees in connection with the consummation of the Business Combination. In 2019, these costs related
	to exploratory acquisition activities.
(3)	Includes primarily external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.
(4)	Includes primarily consulting, advisory and other costs relating to non-recurring items and special projects, including, for the three and nine months ended September 30, 2019, the cost of our move to	| 11
	our new Boston headquarters, executive search costs and, for the three and nine months ended September 30, 2020, implementation of internal controls over financial reporting and tax structuring

advisory costs.

D R A F T K I N G S K P I C O M P A R I S O N O V E R T I M E

B2C KEY PERFORMANCE INDICATORS

• Monthly Unique Payers ("MUPs")
• • We define MUPs as the number of unique paid users per month who had a paid engagement (i.e., participated in a real-money DFS contest, sports bet or casino game) across one or more of our product offerings via our platform
  • MUPs is a key indicator of the scale of our user base and awareness of our brand
  • We believe that growth of our MUP base is generally indicative of our long-term revenue growth potential of our B2C segment although MUPs in individual periods may be less indicative of our longer-term expectations
• Average Revenue per MUP ("ARPMUP")
• • We define and calculate ARPMUP as the average monthly revenue for a reporting period, divided by MUPs (i.e., the average number of unique payers) for the same period
  • ARPMUP represents our ability to drive usage and monetization of our product offerings
  • We use ARPMUP to analyze comparative revenue growth and measure customer monetization and engagement trends

	Three months ended	Nine months ended
	September 30,	September 30,
	2020	2019	2020	2019
Average Monthly
Unique Payers	1,021	621	679	565
("MUPs")
(Users in 000s)
Average Revenue
per MUP	$34	$36	$41	$38
("ARPMUP")

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D K N G S H A R E C O U N T B U I L D

(Shares in thousands)

Total Capitalization

Common Shares Outstanding (As of 30-Sep-20)	357,347
Primary Equity Offering	20,800
Vested LTIP RSUs	8,807
Memo: Vested LTIP (As of 11-Nov-20)	15,554
Memo: LTIP Net Settle for Taxes	(6,747)
Vested Time Based RSUs (30-Sep-20 to 11-Nov-20)	14
Exercised Stock Options (30-Sep-20 to 11-Nov-20)	4,746
Common Shares Outstanding (11-Nov-20)	391,714
Vested Stock Options @ TSM(1)	32,234
Memo: Vested Stock Options	34,558
Memo: Vested Stock Options (As of 30-Sep-20)	39,304
Memo: Exercised Stock Options (Included in Common Shares)	(4,746)
Diluted Shares Outstanding (With Vested Stock Options @ TSM)	423,948
DEAC Private Placement Warrants(2)	1,338
Old DraftKings Private Warrants(3)	121
Fully Diluted Shares Outstanding (With Vested Stock Options @ TSM)	425,407

Note: Table does not include Class B shares, which have no economic or participating rights.

1. Based on Treasury Stock Method ("TSM"); assumes DKNG share price as of 11-November-2020 and strike price of $2.80 per share. Excludes options that are now common shares.
2. Based on TSM; assumes DKNG share price as of 11-November-2020 and strike price of $11.50 per warrant.
3. Based on TSM; assumes DKNG share price as of 11-November-2020 and strike price of $0.03 per warrant.

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