WEBVTT - DraftKings CEO Jason Robbins Talks Earnings, Future of Gambling

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

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<v Speaker 2>Drafting CEO Jason Robbins delighted, say joins us. There has

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<v Speaker 2>been some let's say, back of the Napkin math, and

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<v Speaker 2>people look at the revenue forecast being lowered by about

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<v Speaker 2>two hundred million dollars. Right, Bear with me, Jason, Is

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<v Speaker 2>that exactly how much DraftKings lost on March Madness? The

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<v Speaker 2>two hundred million dollar figure.

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<v Speaker 1>No, we actually put out the numbers. We have a

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<v Speaker 1>bridge in our earnings materials. It was a little bit less,

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<v Speaker 1>but overall it's not too far off.

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<v Speaker 3>Okay, talk to us a little bit about what's too

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<v Speaker 3>far off as well? What else is driving perhaps an

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<v Speaker 3>expected downgrade in full year guidance. Analysts seem to be

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<v Speaker 3>taking this well on the chim as our investors, but

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<v Speaker 3>the regulatory environment as well. How much you haven't in

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<v Speaker 3>you once for that?

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<v Speaker 1>Well, what we we put this out there. We had

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<v Speaker 1>about one hundred and seventy million from sport outcomes, and

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<v Speaker 1>then thirty million came from Jack Pocket being caused to

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<v Speaker 1>not be operating anymore in Texas. But then the overall

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<v Speaker 1>fundamentals of the business were actually very strong. We saw

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<v Speaker 1>increased to structural hold rate, our promotional efficiency increase, so

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<v Speaker 1>some of those things offset as well. So really the

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<v Speaker 1>fundamentals of the business are about as healthy as can be.

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<v Speaker 1>And I think the real question is will all these

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<v Speaker 1>sport outcomes turn around in two quarters in a row now?

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<v Speaker 1>But obviously that happens, and that's part of the greatness

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<v Speaker 1>of the product is that customers can win, and they

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<v Speaker 1>can go on winning streaks like this, and it makes

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<v Speaker 1>it a lot of fun, obviously, And you know, we'll

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<v Speaker 1>see it was the first time and I think second

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<v Speaker 1>time ever there were all four number one seeds in

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<v Speaker 1>the final four. Only the first time ever that that

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<v Speaker 1>happened with also all twos in one three seed in

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<v Speaker 1>the Elite eight, So you never know. Maybe there will

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<v Speaker 1>be another year like that, but probably not. It was

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<v Speaker 1>more likely an anomaly. And you know NBA playoffs already

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<v Speaker 1>have had a bunch of upsets, so it tends to

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<v Speaker 1>kind of swing around the other way over time.

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<v Speaker 3>Ah, too much consistency. But what also is consistent, Jason,

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<v Speaker 3>is what a massive jump in your monthly active use is.

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<v Speaker 3>When you talk about the jackpot in particular, and I'm

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<v Speaker 3>interested in how jackpocket is transferring to other sports casino

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<v Speaker 3>games and the likes or are people sticking to that

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<v Speaker 3>lottery application.

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<v Speaker 1>Well, Jackpocket is still very early in its growth. It's

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<v Speaker 1>still quite nascent, so we believe there's a ton of

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<v Speaker 1>upside for that business and we're excited about it. We

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<v Speaker 1>haven't fully integrated it into the DraftKings app yet, we

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<v Speaker 1>haven't put it on our platform yet, which should dramatically

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<v Speaker 1>increase both the conversion metrics and also the cross sellability

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<v Speaker 1>and marketing ability. And the cross sells already well above

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<v Speaker 1>our expectations, so we think there's even more upside there,

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<v Speaker 1>so we're pretty excited about it. We think there's a

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<v Speaker 1>lot of growth potential, but it's still small, so the

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<v Speaker 1>overall impact on the business isn't great yet, but hopefully

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<v Speaker 1>that changes as jack Pocket continues to grow.

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<v Speaker 2>Jason, in your industry, there are big almost legacy names

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<v Speaker 2>Las Vegas Sands, for example, that are pulling out of

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<v Speaker 2>bids for land based casinos, and I wonder how much

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<v Speaker 2>you can assess their nervousness that online gambling just cannibalizes

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<v Speaker 2>demand for land base and how that impacts you.

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<v Speaker 1>Well, it's certainly a perception that we have to fight

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<v Speaker 1>because it's out there. I do think that the facts

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<v Speaker 1>are very mixed on that. While there's certainly some examples

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<v Speaker 1>you can point to where there's been you know, diminishing

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<v Speaker 1>markets where they've had online gaming, it's also, you know,

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<v Speaker 1>often where there have been declines going into that, and

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<v Speaker 1>then you see the complete opposite story in states like

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<v Speaker 1>New Jersey where they grew and really reversed a declining

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<v Speaker 1>trend for years after legalizing online gaming.

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<v Speaker 3>And it's also a.

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<v Speaker 1>Different property to property. I do understand though, why if

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<v Speaker 1>you're a company that has no I gaming play right now,

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<v Speaker 1>doesn't have an app, doesn't have a way to make

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<v Speaker 1>money off of it, that this wouldn't be seen as

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<v Speaker 1>any upside for you. And so naturally, you know, if

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<v Speaker 1>there's no upside there, there can only be downside. And

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<v Speaker 1>I do understand that. But I think the amount of

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<v Speaker 1>cannibalization and the downside has been greatly exaggerated, and we

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<v Speaker 1>need to do a good job, or a better job,

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<v Speaker 1>I should say, educating on that, because the numbers don't

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<v Speaker 1>necessarily support that story.

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<v Speaker 3>Jason Robbins, Draftking CEO, thanks so much for joining us today.

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<v Speaker 3>I appreciate it.