DraftKings slashes 140 jobs as it eyes improved "operational efficiencies"

Sports betting giant DraftKings announced Wednesday it is cutting roughly 140 jobs, representing 3.5% of its workforce, as it seeks “operational efficiencies." The confirmation came a day after Massachusetts, the tech company's home state, officially launched sports betting at its three casinos. 

These cutbacks were confirmed by Stephen Miraglia, a DraftKings spokesperson, to the Boston Business Journal. “With increased focus on operational efficiencies, we are constantly evaluating our terms to ensure that they are the best positioned to meet our company goals in 2023 and beyond,” Miraglia stated. 

According to the spokesperson, the company has reorganized some teams, which resulted in the elimination of approximately 140 roles. The layoffs included 15 positions based in Massachusetts, home to over 1,300 of 4,000 company employees at a global scale.

In contrast to the company's decision this week, CEO Jason Robins had vowed in 2021 to hire more employees in Massachusetts if the state legalized sports betting. In January, DraftKings secured initial approval from state regulators to host mobile sports betting in Massachusetts. The new market is expected to go live at some point next month. 

While DraftKings said roles are being eliminated in the U.S and internationally, these are primarily in its Europe, Middle East and Africa segment. Most of the affected roles are engineering and HR roles tied to hiring as the company expects slower hiring rates in 2023. This move aligns with other tech companies’ recent decisions to make cutbacks in their staff, such as Rivian Automotive, FedEx and others. 

Despite the cuts representing a small fraction of the company’s total workforce, DraftKings’ stock saw a significant increase of 10% and closed at $16.48 on the day of the announcement.

As it eyes to meet its goals for the year, seeking to make its operations more efficient, the company is also pushing for a legislative change in New York, the nation's top market by handle. This week, Robins joined FanDuel's CEO Christian Genetski in a legislative hearing in the Empire State to warn about the potential negative effects of the state's current tax rate in the thriving gambling landscape. 

Despite the fact that New York found great success in legalizing mobile sports betting last year, the 51%-fixed tax rate is the highest among all states that have authorized mobile sports wagering in the United States. The two executives urged lawmakers to lower the record-high tax on gross gaming revenue, warning mobile sports betting handle will decrease by 10 to 20% annually unless modified. 

In the first year of mobile sports betting in New York, more than $16.5 billion was wagered on sporting events. Thanks to the 51% tax rate, the state collected more than $709 million in revenue to support educational programs, youth sports and problem gambling treatment, according to official data.