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The NFT Game That’s Almost 5% of DraftKings’ Earnings

August 30, 2023

Read Time 7 MIN

DraftKing's Reignmakers, an NFT game on Polygon, is set to generate $70M in high-margin revenue over the next year & boost profits 5% vs. 2022 levels; its design showcases the perks of blockchain use in gaming.


  • Over the next four quarters, we estimate DraftKing’s Reignmakers franchise (an NFT-based fantasy sports game on Polygon) can generate $70M+ in high-margin revenues, accounting for 3% of DraftKing’s top line and 5% of 2022 full-year profits.
  • In their inaugural year, NFL, PGA, and UFC Reignmakers games collectively generated $52 million in revenue for DraftKings, representing 2% of DKNG's top line over the same period.
  • DraftKings' Reignmakers introduced their 2023 NFL collection on August 8th, marking the second year of production.
  • Reignmakers' success showcases the advantages of minimizing blockchain components within a game, enabling developers to target wider audiences while optimizing economic factors, such as marketplace fees.
  • DraftKings strategically prioritized fantasy sports, leveraging existing user passion to enhance game enjoyment and user benefits without the need for extensive creation of valuable IP.

Reign Makers Homepage

As enthusiasts and developers eagerly anticipated the marriage of blockchain technology with gaming, the initial results have left many questioning its feasibility. Concerns surrounding scalability, user experience, and the complexities of integrating blockchain have cast shadows over the potential success of Web3 games. However, amidst this atmosphere of uncertainty, DraftKings Reignmakers has emerged as an example that not only navigates these challenges but also redefines the path to success. With over 2 million unique monthly paying customers, DraftKings utilizes its platform to streamline sports bettors and avid fantasy sports fans into seasonal Reignmakers gaming products. By removing direct blockchain interaction, DraftKings made it exceptionally easy for their growing user base to participate in their new, NFT-enabled fantasy sports games.

Reignmakers by DraftKings merges card collecting with fantasy sports, using NFTs on the Polygon blockchain. While the DraftKings website does provide info on what NFTs are and how to send them to your Web3 wallet, there is no mention of blockchains, NFTs, or any other crypto jargon in their advertising. Cards are acquired via purchasing packs or on the DraftKings Marketplace and used to create athlete lineups, competing for rewards. Reignmakers’ NFL variant has outperformed their UFC and PGA versions due to a consistent schedule and broader card selection, fostering diverse contests and an engaged user base. All payments are made with a credit/debit card or DK dollars if the user already has an account, simplifying the purchasing process to just a few familiar clicks. DraftKings offers card packs priced from $20 to $2,999.99, driving revenue through primary sales and a 10% fee levied on marketplace transactions. Reignmakers facilitated about $170 million of secondary sales1 in its first year of operation, generating $17 million in revenue. These secondary sales accounted for ~33% of Reignmakers' total first-year revenue and approximately 0.8% of DKNG top line over the same period.

The U.S. online sports betting (OSB) gross gaming revenue grew from $0.5 billion in 2019 to $6.8 billion in 2022, representing a 139% CAGR2. Despite the massive growth, in-game betting has only achieved ~15-35% penetration in U.S. markets versus the 70-80% average in European markets3. Under a bullish scenario, penetration of in-game OSB within the United States could reach ~50% over the coming years, driving an estimated 25% increase in the OSB TAM2. The expected increase can be attributed to the frequent breaks in action during popular American sports like Football and Basketball, providing a favorable environment for in-game betting opportunities2. The increasing prevalence of in-game betting augurs favorably for Draftkings’ Reignmakers, enabling them to harness this flourishing market by introducing in-game contests and innovative betting options centered around player inventories.

U.S. Online Sports Betting Gross Gaming Revenue

U.S. Online Sports Betting Gross Gaming Revenue Graph

Source: Stifel Research as of 1/23/2023.

As the #2 player in the U.S. by gross gaming revenue, with an existing user base of over 6 million paying customers through its sportsbook, casino, and daily fantasy sports verticals2, we see DraftKings as well-positioned to re-invest some of their scale advantage into a new, NFT-based business line that is likely accretive to DKNG’s gross margins, which have declined 500bps to 39% since the company went public. Additionally, Reignmakers contests are purposefully designed so that they aren’t pay-to-win. While more expensive cards can allow players to enter more contests or higher-paying contests, winning is still mainly dependent upon the player's knowledge of sports and their skill in choosing successful lineups for each contest. This ensures that the user experience for casual players isn’t significantly affected by the fact that they aren’t willing to spend as much as power users.

In contrast to other games and the broader NFT market, Reignmakers uniquely benefits from an inherent value proposition tied to its cards. Users can readily assess the value of these cards based on their potential to enhance competitive outcomes. This intrinsic link between card utility and competition success sets Reignmakers apart, facilitating a more tangible understanding of NFT worth. Notably, sports-oriented NFTs consistently maintain high standings in NFT collection sales rankings on Cryptoslam!. Unlike games that require novel storylines to entice players, Reignmakers, Sorare, and NFL Rivals leverage established sports interests, resonating with a broader audience. Partnering with existing, evergreen IP derived from live sports eliminates the challenge of generating interest from scratch, ensuring relevance and appeal.

Sports NFTs Represent 50% of Top 6 Collections by 30 Day Sales

Sports NFTs Represent 50% of Top 6 Collections by 30 Day Sales Graph

Source: VanEck Research, Cryptoslam! as of 8/18/23.

NFT Marketplace Fees

NFT Marketplace Fees Graph Comparison

Source: VanEck Research as of 8/24/2023.

DraftKings generates revenue from Reignmakers through both primary sales and a 10% fee on secondary transactions. While this fee is higher compared to OpenSea and Blur's 2.5% and 0.5% fees, its impact is mitigated by Reignmakers' distinct nature. Unlike speculative NFT assets, Reignmakers serve a dual purpose as NFTs are used for competitive endeavors, such as vying for cash prizes. This sets it apart from traditional NFT trading, where speculation and profit are paramount, forcing marketplace fee compression. This difference in utility renders marketplace fees less profound, as the focus remains on enhancing the competitiveness of fantasy teams.

Furthermore, Reignmakers' design caters to mainstream sports enthusiasts, not crypto-savvy individuals. This strategic alignment allowed DraftKings to build its platform to target the 63 million global fantasy sports players4 and avoid competition with the on-chain low-fee NFT marketplaces. This approach contrasts with the 5 million on-chain users that most Web3 games end up targeting due to including too many blockchain elements.

2023 Reignmakers Revenue Estimate

2023 Reignmakers Revenue Estimate Graph

Source: VanEck Research as of 8/24/2023.

According to our base case, from Q3 ‘23 to Q3 ‘24, we estimate that DKNG’s Reignmakers franchise could generate over $75m in revenue. In our model, we assume Reignmakers sells all play-action card packs for each sport and generates $50m/$300m/$500m in secondary transaction volume for the bear/base/bull scenarios. With DraftKings taking a 10% fee on all secondary transactions, our base case indicates that Reignmakers’ revenue could drive just over 3% of DKNG’s top line. While we don’t have access to the data showing the cost of this revenue, we assume the margins to be about 90% as there is basically no cost of production, and customer acquisition costs can be mitigated via cross-selling opportunities. In our base case, we estimate that the profits from the Reignmakers business line could boost DKNG EPS by ~$0.15, representing 5% of their 2022 EPS of -$3.16.


While Reignmakers doesn't fully embody the decentralized values crypto-enthusiasts desire from Web3 games, we think it’s a step closer to finding the happy medium for blockchain integration in games. Suppose Web3-enabled games continue to burden users with interacting with the blockchain. In that case, they will continue to appeal to only crypto users, with a small chance of capturing a significant portion of traditional gamers. However, if game developers focus on building Web3-integrated games for existing fanbases (such as sports) and utilize platforms where all blockchain interaction is entirely abstracted, Web3 games could drive many users on-chain without them knowing. In its current form, Reignmakers isn't likely to drive significant on-chain activity due to its limited interaction with the blockchain. This ensures that the underlying tech doesn’t complicate user experience and also opens the door for deeper integration with decentralized systems as the user experience on blockchains improves. If Reignmakers moved more of their game mechanics to the blockchain, such as requiring contest lineups to be posted to the chain before starting, it could materially impact gas usage over time.

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1 Source:

2 Stifel Research.

3 Sportsradar.


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