DraftKings CEO Jason Robins Talks Product Growth

0:00For Begrim, one of Thailand's oldest established companies, growth does not begin with a deal. It begins with trust. Later in this podcast, hear how that approach has taken the company from Thailand, to South Korea, and the United States. Bloomberg Audio Studios Podcasts, Radio, News We're here of course with Jason Robinson Go founder and CEO of DraftKings here on Kickoff Weekend for the National Football League in the US and Jason we got our first game last night. Obviously a rematch of the Super Bowl match with the South Seahawks defeating the Patriots. The big question so much isn't who won on the field but I guess what the business actually looked like for DraftKings on day one of the biggest sport in the US. Well it's always been exciting time of year for us and for all sports fans when NFL is starting. It's a big start to the biggest sport and also this fall is when the entire sport calendar is

1:01very active. Usually the summer is a bit of a lighter period this year. We had the World Cup obviously which was a big thing in the middle of the summer but usually it's a lighter just baseball, a few other things going on but now in the fall we have all four major sports going at once coming up just a short while and so this is really kind of the kickoff of it with college football of course starting and then NFL kicking off last night and really just excited that the seasons here it's going to be a huge season for us I think we have a you know now our sports product available nationwide which the first time we've really been able to do that so I'm pretty excited to see what that brings. So I mean just comparing I know we're just kind of starting the fall here but as you look to your numbers from last year are you anticipating meaningful growth year over year in all of those sort of those key metrics both in terms of the handle growth the share of wagering that's being occurred that's occurring live as well as you know some first time depositors.

2:05Yeah I mean I think that our expectation is absolutely that we see growth across all of our products but I think the biggest growth is going to come from the prediction space. Sportsbook is growing nicely though definitely seeing great growth there eye gaming is growing so still seeing you know very healthy strong growth there but predictions this is the first NFL season that for the whole season we've had our offering available on a broader basis so I think that's going to be a huge part of this fall story. Do you have any insight at least for last night in that first game like how much business actually went to the prediction markets part of draft King's relative to the sportsbook? Yeah I don't want to put out any numbers just yet but we will certainly be providing some updates on that in the not too distant future but as you can imagine given this was the first time week one we've had our game one I should say that we've had a predictions product you know it's pretty big and a night for us. I am curious just about kind of the balance between

3:06these sort of two sides of the business the traditional sportsbook and the emerging predictions business particularly in light of the legal fight that you and others have been having with CalShi and some of the other prediction market pioneers in this space. We had that recent ruling in that ninth circuit and now I believe New Jersey has now filed that Supreme Court petition and we just learned I think a couple of days ago that that was docketed. Are you prepared right now to actually file an amicus brief to the Supreme Court on this issue and if so what side are you taking? Well we're not involved in any of these things so we're going to stay on the side lines we're obviously an interested party and seeing what the outcomes are but we've chosen to operate in states that do not have legal online sports betting that we are licensed to do and we have not been involved in any of the court cases and we'll continue to take that position. Can you tell me what you want the outcome of the Supreme Court case to be? You know I think the most important

4:09thing is that there's clarity I think you know unlikely but obviously an unfortunate outcome would be one that's not totally clear and results in additional litigation it would be nice to just get a you know clear answer and understand what the rules of the road are and we're happy to operate under whatever that clear answer might be we just need to understand what that is and hopefully we'll get there soon. Well what if there isn't a clear answer is this a situation where draft kings become sort of this weird company where you're going to basically be able to you know do prediction markets in certain areas but then on the sports book side basically it becomes a bit more bifurcated with regards to where you can actually operate across the US and how? Well eventually we will get to a clear answer it's just what is the process to get there but I think there will be a clear answer it won't operate in the current state that it's in now that's why the court process exists so we just have to you know be patient and wait for that to play out. Do you think it's kind of ironic that as you sort of obviously look to Calci and that fight that's going on there

5:12as you roll out your own prediction markets business you're now facing lawsuits from people saying well wait a minute draft kings is now doing illegal betting or at least betting outside the lines of regulation how do you sort of square that circle as to where this company lies legally and regulatory across the nation? Well we haven't been in any litigation with the states that's been you know other members of the predictions industry we've actually been able to avoid that but your 10Q actually disclosed at least three lawsuits did it not I mean have you been in conversation? Oh you're talking about civil suits? Yeah the civil suits excuse me. Oh I mean we get sued for stuff all the time I mean it's you know any it's you know the litigious society we live in you know I'm not that we don't take those things seriously we do but I think you know anytime there's a new category you're going to have people sue and you over something or another on and I think the real important thing that we've really made sure take care on is to have open dialogues with our regulators and make sure that we understand how they're viewing things and that we are respecting you know what they are

6:17looking to achieve and I think that's been a really good process and resulted in some very positive outcomes for both us and for the states that we are regulated in. There has been some concern amongst investors though that the transition that's been happening in the betting slash prediction markets has been a huge overhang your stock has been below its 200 day moving average for almost a full year now I am curious as to when you can start to see a material improvement both in terms of revenue growth profitability growth but also some additional value to this company that investors I guess within a higher price tag on. You know it's very good question that you're asking and I wish that I had the ability to you know forecast what the markets were going to do on any given moment or when things were going to happen I think the way we look at it is we believe that we are building a great business we think that predictions is a huge incremental opportunity for us we have strong data showing that cannibalization is not occurring and that it will not have any material effect on our core sports betting business those are all things we have pretty strong conviction

7:22in from the data and the information that we have I do think that we of course have more data and information on this particular topic than maybe the average investor even though a lot of it's out there it's complicated and people don't necessarily take the time to really understand it to listen and also in general investors they want certainty they don't like not knowing what outcomes are going to be and sometimes disruptive moments you know it can go either way it can be a huge opportunity or you know companies cannot perform and not adapt and bad things can happen so I think that's a lot of the way investors might look at it but we believe we have a very strong track record of repeatedly launching different products and competing in them and we've been successful in doing that for many many years now so we have a very strong level of conviction that not only is our existing business healthy and growing but that predictions is going to represent a big incremental opportunity for us and we're out there executing against that in a disciplined way so you know when will that become apparent more to investors I don't know I'm

8:26hoping in the next couple quarters you know we we really can post some data showing that it is a bit of a proven story for sure I can say it all I want but I think people want to see the results and we're happy to you know go out there and put our money where our mouth is. What about the partnership with ESPN I mean how much is that helping if at all not only the bottom line but more importantly just customer acquisition? Well ESPN has been a great partner and we worked with them for many years but never in as big a way as we have in this new deal so very excited about that obviously NBC we had our game last night and the game last night was on NBC we have our partnership there very excited we have so many great partners including the NFL and other sports leagues and ESPN it's been awesome they've been really great to work with and I think back to sort of previously we're talking about one of the nice things about that type of partnership is it's nationwide and so now that we have a predictions product in so many states that we couldn't previously

9:27offer and we all of a sudden have something that's relevant to almost everybody in the entire country and I think that that's a huge thing that makes you know our ESPN and our NBC and our other national partnerships that much more valuable. Hey Jason I really appreciate you taking time for us we'll catch up again soon. Thanks thanks for having me. A new market a new partner a new project growth concerns simple but for one of Thailand's most enduring companies be grim expansion starts long before any deal is signed it starts with relationships it starts with trust. We follow our vision that's why we went to America we enter into US market for the small hydro protect 30 MkW in Malaysia there are many many companies that are very successful in their own metrics and so I think everybody has to define their own way of success I would find success by being a good part of society people look at us say yeah this company does well for society that I would define as success. Find out

10:30more by searching be grim students of compassion wherever you get your podcasts. This is Robert Smith from business history if you're listening to this there's a good chance you're a small business owner and like every small business owner you started with a dream to do what you love and watch it grow what you probably didn't dream about keeping up with cyber threats that's where mastercard can help with access to tools that help identify cyber threats to better protect your business building a dream business priceless for cyber security in a changing world there's mastercard. Learn more at mastercard.com slash small business.