DraftKings CEO on expanding sports betting into new states, attracting casino customers and limiting spiked stocks
The plan is that we should make the current capital that we have profitable, and everyone has rallied around that. We have a multi-year financial plan. Everyone is committed to the numbers, not just for this year, but for next year and beyond. That’s what we’re going to do.DraftKings CEO Jason Robins said the company is actively trying to limit or outright eliminate the action of sharp bettors in sports betting and instead wants to generate more parlay bets.
A month after the Boston-based operator completed its acquisition of Golden Nugget Online Gaming (GNOG), Robins said DraftKings is also trying to tailor its online casino marketing to players who tend to be older, more female and more interested in slots.
On Monday, Robins informed attendees of the Goldman Sachs Travel & Leisure Conference that DraftKings is focusing on several potential new states for sports betting, including its home state of Massachusetts, but insisted the company doesn’t need to raise additional capital for expansion.
“We’ve been very consistent that we have a multi-year plan that doesn’t require us to raise more capital,” Robins said.
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Try to “get smart to eliminate sudden actions”
In comments likely to irritate some of the sports betting public (again), Robins said DraftKings is “trying to be smart about eliminating net action, or at least limiting it if we don’t want so much of it. We also make sure we have a high parlay mix because people like that, that’s something we’ve been pushing a lot since we migrated. [to SBTech].”
The CEO caused a stir when he made similar comments last fall. At the virtual Canaccord Genuity Digital Gaming Summit on Nov. 30, 2021, Robins said sports betting “is an entertainment business. People doing this for profit are not the players we want. »
At Monday’s event, Robins said DraftKings Sportsbook wants to replicate what he’s done in daily fantasy sports (DFS), where margins increased as the market matured “because we just decided to increase them. You can do it. The tricky part is doing it at the right time and in the right way, without hurting the customer experience. »
Robins doubled down on the idea that traders’ win rate should increase as markets mature, rather than the other way around – that as markets mature, the more experienced sports bettors, who generally do better on average, come out on top.
“I think when you’re in an early-stage environment, it’s not the worst thing in the world if you give people a few extra winning experiences out of ten instead of trying to maximize the margin you take.”, Robins said. “It’s an area we’re focusing on, but very deliberately. What we don’t seek to do are things like take money from people by forcing them to make bets they don’t want to or trying to trick them into doing so.
Efforts continue to entice sports bettors to play at the online casino
Robins said that while DraftKings has tried to sell esports fans to iGaming, there will always be players “who may not come through the esports funnel.
“A lot of them see DraftKings as a sports-centric company, a sports-centric brand. But we also saw that once we actually got [these players]they were more likely to rate our products higher than they perhaps thought. We retain them really well – it’s more of a branding issue.
Although he doesn’t have a lot of data to rely on, the CEO said DraftKings believes Golden Nugget online casino players are “more female biased, more slots players and higher average age. We can run the same kinds of marketing programs that we were trying to run with the DraftKings brand, but acquire them on Golden Nugget more cheaply and efficiently.
“It’s really going to allow us to focus more on expanding the overall iGaming market, as opposed to maybe the 50% that we were getting good at and then making do with the remaining 50%.”
The next states DraftKings is focusing on
If we are able to pass [the initiative] in November, we could potentially look at a 2023 launch for California, hopefully before the NFL season.Robins said Ohio, Maryland and Puerto Rico are all likely to launch sports betting in 2023. CEO said it would be transformative if these jurisdictions legalized all sports betting.
“Those alone would bring the total population of the United States to 46% penetration. It’s really cool to see that we are close to 50%. We don’t have the three largest states yet. Naturally, these states are going to be a big area of interest for us. The top three US states by population are California, Florida, and Texas.
DraftKings is one of three operators leading efforts to legalize sports betting in California. The company worked with BetMGM and FanDuel to secure an initiative for this in the November ballot.
“If we manage to pass [the initiative] in November, we could potentially look at a 2023 launch for California, hopefully before the NFL season,” Robins said. “Beyond that, I think Texas will at least consider [sports betting] in their next legislative session. Our home state of Massachusetts is a great gaming state – it’s an area we focus on.
“There are a few others who we believe have a path to legislation. North Carolina is on point. Georgia, we didn’t make it last year, but hopefully it will happen in a future year as well.
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No need for more capital
At the end of the interview, Robins insisted that DraftKings wouldn’t need to raise any more capital.
“We have stress tested our plan in various scenarios. Of course, there could always be a black swan type situation like what happened [when] sports ceased in 2020. If it was for a really extended period, maybe the math changes. But even then, there are levers we can pull. We would stop marketing if we had to.
“It would be really difficult to come up with a scenario where we would need to raise capital. The plan is not to. The plan is that we should make the current capital that we have profitable, and everyone has rallied around that. We have a multi-year financial plan. Everyone is committed to the numbers, not just for this year, but for next year and beyond. That’s what we’re going to do.