Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We head back to earnings with DraftKings out with their results,
Speaker 2: cutting its revenue forecast for the full year. The company
Speaker 2: also out though, with news that Disney signed a new
Speaker 2: multi year deal to make the sports betting company the
Speaker 2: official betting site and odds provider for the ESPN Sports Network.
Speaker 2: Let's bring in DraftKings CEO Jason robbins, It's an interesting partnership,
Speaker 2: and I think that's where we should start. How much
Speaker 2: does this move the needle for you? You know, we've
Speaker 2: talked in the past on this program, Jason with you
Speaker 2: about the integration of the live sports event and the
Speaker 2: broadcast with the betting activity. Your big picture goal with
Speaker 2: this deal, Well, first of all.
Speaker 3: ESPN is a you know, iconic brand. It's you know,
Speaker 3: by far the biggest name in sports in the United States,
Speaker 3: and they have an incredible portfolio, unmatched portfolio of sports content, influencers, talent.
Speaker 3: So it's really, you know, for us, just the greatest
Speaker 3: partner you can have when you're in the space we're
Speaker 3: in and Jimmy Pataro runs it really understands and I
Speaker 3: think values the sports betting space and understands that the
Speaker 3: customer overlap is high and it's important that they engage
Speaker 3: their customers by being partnered with somebody like Drafting, so
Speaker 3: really excited to embark on it. We've been partners with
Speaker 3: them many times in the past, so it's familiar territory.
Speaker 3: We know all the people there and we're looking forward
Speaker 3: to working together. And you add that to our deals
Speaker 3: with the NBC, Universal on Amazon and you know others,
Speaker 3: we have an unmatched I think presence across the sports
Speaker 3: landscape over the next several years.
Speaker 2: Prediction markets. Wednesday night, we were with Robin Hood at
Speaker 2: their in person earning school. That was wacky. Don't know
Speaker 2: if you consider that, but the month of October massive
Speaker 2: volumes for them. You're being super thoughtful about predictions. I
Speaker 2: understand that, and you have a clear strategy. My question
Speaker 2: has always been how much a growth in a nascent
Speaker 2: predictions market cannibalizes other offerings that you have.
Speaker 3: I think very little. If you look at the UK,
Speaker 3: for example, exchange based betting is about five percent of
Speaker 3: the total pie, so you know that's probably about right.
Speaker 3: And I think a lot of it is largely incremental
Speaker 3: because they're market makers and others that are not present
Speaker 3: on traditional sports books that generate a lot of the volume.
Speaker 3: So I think it's very much an incremental opportunity for us,
Speaker 3: and that's why we're so excited about it. We acquire
Speaker 3: Realbird and we're also looking to you know, enter the
Speaker 3: market sometime in the next couple months.
Speaker 1: What's interesting, Jason, is investors analysts out there called out
Speaker 1: on the actual earning script talking about how marketing expenses,
Speaker 1: higher sales expenses did eat into the results, and they
Speaker 1: call them also some ugly outcomes when it comes to
Speaker 1: the sports games for that you can't control. But what
Speaker 1: about the expenses you're going to have to have on
Speaker 1: the predictions markets.
Speaker 3: Well, we do plan to make some investment there. We
Speaker 3: mentioned this on the call that we're going to be
Speaker 3: more i think conservative in terms of the paybacks we're
Speaker 3: looking for, just given how nissent a space it is
Speaker 3: and the fact that you know, it's unclear kind of
Speaker 3: how this will all play out, but we are going
Speaker 3: to make some investment there first, of course, and getting
Speaker 3: a product developed and making sure that that's you know,
Speaker 3: the best in class. You can't win and we've always
Speaker 3: said this product is the most important thing you can't
Speaker 3: win if you don't have a great product, and then
Speaker 3: you know, assuming that the numbers check out, we'll spend
Speaker 3: marketing accordingly. We're going to be very data driven like
Speaker 3: we always are, and everything we will test into it.
Speaker 3: But we did want to make sure as we guided
Speaker 3: that we were thoughtful about giving the team some space
Speaker 3: to be able to accelerate spend if the numbers look good.
Speaker 1: And therefore the guide did pull back rather than uplift
Speaker 1: going forward. Jason, but you say it's conservative. You talk
Speaker 1: about an incremental opportunity from predictions, and I'm really interested
Speaker 1: as how you make sure this doesn't cannibalize what you
Speaker 1: already have out there. You've talked a lot about how
Speaker 1: this might actually make more states accessible to sports betting,
Speaker 1: because at the moment you can get fifty states with
Speaker 1: this predictions market, but what you've got twenty five at
Speaker 1: the moment for your offering, and you're about to and
Speaker 1: you also have DC and then you're out of Missouri.
Speaker 3: Yeah, I mean, I think you're exactly right that this
Speaker 3: will hopefully lead more states to decide that they might
Speaker 3: as well legalize sports betting. It's I think predictions are
Speaker 3: a powerful talking point for that, because you know, same
Speaker 3: as the illegal market, same as anything. In this case,
Speaker 3: it's regulated. But the bottom line is it's activity that's
Speaker 3: already happening in the state at some level that they
Speaker 3: are not directly benefiting from and regulating. So I do
Speaker 3: think that'll motivate some states, But for us, really the
Speaker 3: cannibalization thing isn't a huge concern. We haven't seen that happen,
Speaker 3: not just here, but as I mentioned, overseas where there's
Speaker 3: long established I mean, it's not a brand new thing
Speaker 3: like it is here. There's been predictions and sports exchanges
Speaker 3: around for decades in the UK, for example, So we
Speaker 3: feel like there's pretty good data out there to show
Speaker 3: that head to head, the traditional sports betting product is
Speaker 3: a much far superior product for customers.
Speaker 2: Jason, you said that this is the most bullish you've
Speaker 2: ever felt about the company's future. What are the underlying trends,
Speaker 2: data points, behaviors of your customers that give you that
Speaker 2: conviction and why do you have it now that you
Speaker 2: didn't have previously?
Speaker 3: Well, I think if you take a step back, you know,
Speaker 3: it really starts with the progress that we've made over
Speaker 3: the last few years in the position we put ourselves in.
Speaker 3: Remember two years ago, we weren't even profitable. Three years ago,
Speaker 3: we had nearly a billion dollar adjusted EBA de loss.
Speaker 3: At that point, you know, we were getting killed in
Speaker 3: the market because people thought we were going to run
Speaker 3: out of money and go out of business. We really
Speaker 3: buckled down, we grew revenues, we managed costs, and you know,
Speaker 3: just a few years later we've had an over billion
Speaker 3: and a half swing. So I think that shows that
Speaker 3: we are in a great position. But also more importantly,
Speaker 3: now we're in a position to play offense. We are profitable,
Speaker 3: we have scale, we have the best product in the market,
Speaker 3: we have the absolute best partnerships and presence across the
Speaker 3: media landscape. About to launch sports predictions, which I believe
Speaker 3: represents a huge incremental opportunity for us. So a lot
Speaker 3: of really exciting things going on, and the only real
Speaker 3: negative on the quarter was the sport outcomes. I think
Speaker 3: all the steriover predictions is kind of nonsense, but the
Speaker 3: really only negative sport outcomes. But that's a temporary thing,
Speaker 3: that's not something that has anything to do with the
Speaker 3: fundamentals of the business.
Speaker 2: Draft Kings CEO Jason Robbins thank you very much,