A DraftKings office in Boston. The company expects 2020 pro forma revenue of $500 million to $540 million.
Photo: Charles Krupa/Associated PressDraftKings Inc. DKNG -6.52% posted a steeper-than-expected loss for the recent quarter, and shares fell 7%, though it said users have started betting again as sporting events began to resume.
The online-betting company posted a loss of $161.4 million, or 55 cents a share, compared with a loss of $28.11 million, or 15 cents a share, in the year-ago period. Analysts polled by FactSet were looking for a loss of 20 cents a share.
Revenue rose to $70.9 million from $57.4 million. Analysts were looking for $66.4 million.
Including the effect of the company’s combination with SBTech (Global) Ltd. and Diamond Eagle Acquisition Corp. as if it had been completed Jan. 1, 2019, revenue would have fallen to $75 million from $83 million.
“We all realize that there has been and will continue to be hiccups in the sports calendar in the back half of the year,” said Jason Robins, the company’s co-founder, chairman and chief executive.
DraftKings expects 2020 pro forma revenue of $500 million to $540 million, reflecting 22% to 37% growth in the second half of the year. The company said it doesn’t anticipate long-term effects on its plans due to Covid-19.
The guidance doesn’t include college sports due to recent cancellations by collegiate conferences, though the company expects college sports to be played in some form, Finance Chief Jason Park said.
The Internal Revenue Service in an memo dated July 23 said daily fantasy sports operators must pay excise tax on wagering.
“This was a memo that has no force of law, is nonbinding and [in] our view is deeply flawed in its analysis,” Mr. Robins told analysts. “Our position continues to be, which we believe has been reaffirmed through state legislatures and courts throughout the country, that [daily fantasy sports] is not wagering.”
DraftKings launched mobile sports betting in Colorado and its online-casino platform, or iGaming, in Pennsylvania during the quarter ended June 30. Since then, the company said it has launched sports betting in Illinois and iGaming in West Virginia, and that it is working to enter Virginia and Tennessee for sports betting and Michigan for sports betting and iGaming. The company is active in nine states for mobile sports betting and in three states for iGaming.
The company said it had to issue refunds related to canceled sporting events for the quarter. But with the return of the National Hockey League, National Basketball Association and Major League Baseball games, DraftKing users have continued to bet on its platform, Mr. Robins said.
Sales and marketing expenses rose 55.7% to $46.19 million as the company operated in six new states during the quarter, beginning to invest in advertising in late May and June as sports began to resume, Mr. Park said. The company plans to continue investing in advertising for the rest of the year, he added.
The company said it ended the second quarter with more than $1.2 billion in cash and no debt on its balance sheet.
Write to Dave Sebastian at dave.sebastian@wsj.com
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