WEBVTT - DraftKings CEO Jason Robins Talks Prediction Market Surge

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Jason Robbins is CEO of Draft Kings and he joins

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<v Speaker 2>us now. Jason, always a pleasure to speak with you,

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<v Speaker 2>and there's a lot to discuss when it comes to

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<v Speaker 2>prediction markets. We'll dig into that shortly because I'm sure

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<v Speaker 2>it's taking up a lot of your and your company's

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<v Speaker 2>mind space right now. What part of your business is

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<v Speaker 2>not affected by prediction markets and how's that going?

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<v Speaker 3>Well, the bulk of our business isn't prediction markets. Still,

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<v Speaker 3>that's still a very new business for us. Our core

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<v Speaker 3>business is sportsbook and iGaming, and both of those are

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<v Speaker 3>doing very well. We had seventeen percent revenue growth, really

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<v Speaker 3>great quarter from a profitability perspective, and April has been

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<v Speaker 3>a great month. Q two is off to a great star.

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<v Speaker 3>We mentioned on our call. April revenue is up twenty

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<v Speaker 3>two percent, so really strong growth. And I think the

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<v Speaker 3>most exciting piece that is in the future prediction markets.

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<v Speaker 3>That's not even in the numbers yet, so hopefully that'll

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<v Speaker 3>provide even more upside.

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<v Speaker 2>Absolutely, what have you observed about how your customers use

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<v Speaker 2>and interact with these sports events contracts?

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<v Speaker 3>Well, it's very early, but it's very similar to what

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<v Speaker 3>we're seeing on our Sportsbook product. Very similar type of customers,

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<v Speaker 3>similar engagement in terms of the sports that they like,

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<v Speaker 3>a little bit more on March Madness relatively speaking than

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<v Speaker 3>we saw in some of the other sports, which is interesting,

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<v Speaker 3>but overall looks very much like the same type of

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<v Speaker 3>customer that we got in Sportsbook.

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<v Speaker 1>When do you think this app will be ready and

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<v Speaker 1>will it be positioned to challenge rivals? Like?

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<v Speaker 3>Hell, she Well, it's ready already. We've been in market

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<v Speaker 3>since December, but it's really improved a ton and we

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<v Speaker 3>just launched the super app version, which is the combination

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<v Speaker 3>of it into the main app, a few like about

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<v Speaker 3>a month or so ago, and already we're seeing customer

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<v Speaker 3>acquisition costs plummet. We had about a ninety percent decline

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<v Speaker 3>and customer acquisition costs over the last month or two.

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<v Speaker 1>And you said, it's still not a big part of

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<v Speaker 1>your business, but how big of a game changer could

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<v Speaker 1>this be down the line?

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<v Speaker 3>Well, what this does is it allows us to offer

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<v Speaker 3>a product to customers in the nearly half of the

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<v Speaker 3>country that we don't have online sports betting. That includes

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<v Speaker 3>the three largest states, California, Texas and Florida by population,

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<v Speaker 3>that is now an addressable audience for US, So it

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<v Speaker 3>will take time for them to ramp, but I think

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<v Speaker 3>it's going to happen pretty quickly starting this NFL season

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<v Speaker 3>and beyond, and we're planning on investing as long as

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<v Speaker 3>the numbers are good. But so far, we really like

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<v Speaker 3>what we're seeing and we're excited about the potential for

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<v Speaker 3>this to be a huge growth lever for us for

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<v Speaker 3>several years to come.

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<v Speaker 2>The fact that you're offering a prediction market product and

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<v Speaker 2>that you are getting ready for this super app, this

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<v Speaker 2>unified APP would suggest that you and the rest of

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<v Speaker 2>management expects a legal status of those markets to be

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<v Speaker 2>ultimately affirmed by the Supreme Court. Is that a fair statement.

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<v Speaker 3>Well, I don't want to predict what the Supreme Court's

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<v Speaker 3>going to do. It's always tricky on something like that.

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<v Speaker 3>We just need to make sure we're prepared regardless of

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<v Speaker 3>the outcome. And I do think that we'll be in

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<v Speaker 3>a great position no matter what ruling is. If it

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<v Speaker 3>ends up that, you know, the Supreme Court strikes us

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<v Speaker 3>all down, then you know, we go back to having

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<v Speaker 3>less competitors like the Calchies of the world out there.

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<v Speaker 3>But if they end up affirming this, then it represents

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<v Speaker 3>a huge new market opportunity that we're just beginning to tackle.

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<v Speaker 3>So we're pretty happy either way, and we'll see what happens.

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<v Speaker 2>I mean, your business is sports, whether it's through the

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<v Speaker 2>traditional sports books or through these sports events contracts. Do

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<v Speaker 2>you plan to offer events contracts on non sports events

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<v Speaker 2>like politics, for instance, economic data, cultural events.

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<v Speaker 3>We do offer those. We have a number of those.

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<v Speaker 3>I think, particularly the politics ones get decent amounts of

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<v Speaker 3>decent amounts of volume obviously the bulk of the industry

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<v Speaker 3>and a matter which prediction platform you look at. As sports,

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<v Speaker 3>it's true, you know almost ninety percent, it'll be north

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<v Speaker 3>of ninety percent once the NFL season hits. But those

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<v Speaker 3>that are, even though they don't get as much volume,

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<v Speaker 3>are very important from a customer engagement standpoint. I think

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<v Speaker 3>a lot of people just like looking at them, and

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<v Speaker 3>it's almost like a substitute for looking at polls to

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<v Speaker 3>see how people are doing and elections and things like that.

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<v Speaker 3>And I think it's almost a novelty, just in an

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<v Speaker 3>eyeball kind of catching things. So even though not a

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<v Speaker 3>lot of volume goes there, we view them as a

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<v Speaker 3>very important part of customer engagement.

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<v Speaker 1>And you've now posted two straight carter so of positive

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<v Speaker 1>net income and brought backstock. Does that a new phase

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<v Speaker 1>for capital allocation at your company?

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<v Speaker 3>Well, we started generating meaningful cash flow last year, it's

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<v Speaker 3>ramping into this year, and we've always said that, you know,

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<v Speaker 3>we're going to use at least some of that capital

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<v Speaker 3>the buy back stock. I think, depending on how things go,

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<v Speaker 3>we may buy back more or less in any given

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<v Speaker 3>period of time, but our overall commitment is that we

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<v Speaker 3>are aiming to try to offset any dilution so that

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<v Speaker 3>our share acount stays neutral and maybe even declines a

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<v Speaker 3>little bit over time.