Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Jason Robbins is CEO of Draft Kings and he joins
Speaker 2: us now. Jason, always a pleasure to speak with you,
Speaker 2: and there's a lot to discuss when it comes to
Speaker 2: prediction markets. We'll dig into that shortly because I'm sure
Speaker 2: it's taking up a lot of your and your company's
Speaker 2: mind space right now. What part of your business is
Speaker 2: not affected by prediction markets and how's that going?
Speaker 3: Well, the bulk of our business isn't prediction markets. Still,
Speaker 3: that's still a very new business for us. Our core
Speaker 3: business is sportsbook and iGaming, and both of those are
Speaker 3: doing very well. We had seventeen percent revenue growth, really
Speaker 3: great quarter from a profitability perspective, and April has been
Speaker 3: a great month. Q two is off to a great star.
Speaker 3: We mentioned on our call. April revenue is up twenty
Speaker 3: two percent, so really strong growth. And I think the
Speaker 3: most exciting piece that is in the future prediction markets.
Speaker 3: That's not even in the numbers yet, so hopefully that'll
Speaker 3: provide even more upside.
Speaker 2: Absolutely, what have you observed about how your customers use
Speaker 2: and interact with these sports events contracts?
Speaker 3: Well, it's very early, but it's very similar to what
Speaker 3: we're seeing on our Sportsbook product. Very similar type of customers,
Speaker 3: similar engagement in terms of the sports that they like,
Speaker 3: a little bit more on March Madness relatively speaking than
Speaker 3: we saw in some of the other sports, which is interesting,
Speaker 3: but overall looks very much like the same type of
Speaker 3: customer that we got in Sportsbook.
Speaker 1: When do you think this app will be ready and
Speaker 1: will it be positioned to challenge rivals? Like?
Speaker 3: Hell, she Well, it's ready already. We've been in market
Speaker 3: since December, but it's really improved a ton and we
Speaker 3: just launched the super app version, which is the combination
Speaker 3: of it into the main app, a few like about
Speaker 3: a month or so ago, and already we're seeing customer
Speaker 3: acquisition costs plummet. We had about a ninety percent decline
Speaker 3: and customer acquisition costs over the last month or two.
Speaker 1: And you said, it's still not a big part of
Speaker 1: your business, but how big of a game changer could
Speaker 1: this be down the line?
Speaker 3: Well, what this does is it allows us to offer
Speaker 3: a product to customers in the nearly half of the
Speaker 3: country that we don't have online sports betting. That includes
Speaker 3: the three largest states, California, Texas and Florida by population,
Speaker 3: that is now an addressable audience for US, So it
Speaker 3: will take time for them to ramp, but I think
Speaker 3: it's going to happen pretty quickly starting this NFL season
Speaker 3: and beyond, and we're planning on investing as long as
Speaker 3: the numbers are good. But so far, we really like
Speaker 3: what we're seeing and we're excited about the potential for
Speaker 3: this to be a huge growth lever for us for
Speaker 3: several years to come.
Speaker 2: The fact that you're offering a prediction market product and
Speaker 2: that you are getting ready for this super app, this
Speaker 2: unified APP would suggest that you and the rest of
Speaker 2: management expects a legal status of those markets to be
Speaker 2: ultimately affirmed by the Supreme Court. Is that a fair statement.
Speaker 3: Well, I don't want to predict what the Supreme Court's
Speaker 3: going to do. It's always tricky on something like that.
Speaker 3: We just need to make sure we're prepared regardless of
Speaker 3: the outcome. And I do think that we'll be in
Speaker 3: a great position no matter what ruling is. If it
Speaker 3: ends up that, you know, the Supreme Court strikes us
Speaker 3: all down, then you know, we go back to having
Speaker 3: less competitors like the Calchies of the world out there.
Speaker 3: But if they end up affirming this, then it represents
Speaker 3: a huge new market opportunity that we're just beginning to tackle.
Speaker 3: So we're pretty happy either way, and we'll see what happens.
Speaker 2: I mean, your business is sports, whether it's through the
Speaker 2: traditional sports books or through these sports events contracts. Do
Speaker 2: you plan to offer events contracts on non sports events
Speaker 2: like politics, for instance, economic data, cultural events.
Speaker 3: We do offer those. We have a number of those.
Speaker 3: I think, particularly the politics ones get decent amounts of
Speaker 3: decent amounts of volume obviously the bulk of the industry
Speaker 3: and a matter which prediction platform you look at. As sports,
Speaker 3: it's true, you know almost ninety percent, it'll be north
Speaker 3: of ninety percent once the NFL season hits. But those
Speaker 3: that are, even though they don't get as much volume,
Speaker 3: are very important from a customer engagement standpoint. I think
Speaker 3: a lot of people just like looking at them, and
Speaker 3: it's almost like a substitute for looking at polls to
Speaker 3: see how people are doing and elections and things like that.
Speaker 3: And I think it's almost a novelty, just in an
Speaker 3: eyeball kind of catching things. So even though not a
Speaker 3: lot of volume goes there, we view them as a
Speaker 3: very important part of customer engagement.
Speaker 1: And you've now posted two straight carter so of positive
Speaker 1: net income and brought backstock. Does that a new phase
Speaker 1: for capital allocation at your company?
Speaker 3: Well, we started generating meaningful cash flow last year, it's
Speaker 3: ramping into this year, and we've always said that, you know,
Speaker 3: we're going to use at least some of that capital
Speaker 3: the buy back stock. I think, depending on how things go,
Speaker 3: we may buy back more or less in any given
Speaker 3: period of time, but our overall commitment is that we
Speaker 3: are aiming to try to offset any dilution so that
Speaker 3: our share acount stays neutral and maybe even declines a
Speaker 3: little bit over time.