DraftKings CEO Jason Robins made a few interesting comments on the company’s third quarter earnings call Friday morning.
One of those comments had to do with election betting, which technically is not betting but rather trading event contracts. Robins acknowledged the recent interest shown and that it is something on DraftKings’ radar.
Robins also touched on what might be a conservative estimate for structural hold growth, potentially entering Florida and the shift in promotional focus for the company.
The tone of the 8:30 a.m. Eastern call wound up bouncing the stock back from down around 5% in after-hours trading after the earnings report was released Thursday. DKNG opened Friday up slightly at $39.12 and was up around 5% at 10:30 a.m.
DraftKings will consider event contracts
There is no doubt DraftKings will have someone investigate whether event contract trading could move the needle for the company. When and how deeply really just depends on other priorities, Robins said.
“I do think there could be a place for it outside of elections, but that’s really where the interest seems to be now from a customer demand side,” Robins said. “Definitely something we’re looking at in advance of next presidential election, and potentially there will be an opportunity to look at something sooner.
“… We’ll have to see where it fits in the priority list, but it is something we’ll plan on looking at ahead of next election for sure.”
DraftKings to Florida too soon to call
Hard Rock Chairman Jim Allen told CNBC last month he could see the Seminole Tribe partnering with marquee sports betting brands like DraftKings and FanDuel to enter Florida. Hard Rock Bet owns exclusivity in Florida through 2051 but has the ability to partner with others.
While DraftKings is interested in offering sports betting in Florida, discussions are still in early stages, Robins said.
“Very encouraged to hear those comments,” Robins said. “We really have a ton of respect for Hard Rock and the Seminoles. Jim Allen’s done a fantastic job and enjoyed spending time and getting to know him and his team. We’ll see how that all plays out. Obviously Florida is a big state, and it’s something we’d be very excited [for] if there was a path to be able to offer our product to customers there.
“But not really up to us. We’ll have to see what they want to do and how the discussions progress. Obviously if there’s anything material we’ll come talk about it, but at this point I wouldn’t say that it’s very far along. There’s been a lot of speculation in the press, but really I think it’s a pretty early stage.”
Cautious on structural hold guide
DraftKings expects structural hold of around 10.5% for 2024, rising slightly to 11% for 2025.
When asked why the company guided to just a 0.5 percentage point increase, Robins said that guidance versus internal expectations are different.
“I think that’s what we feel we have the line of sight to commit to right now,” Robins said. “It’s more about how we view our commitment than what we really want to achieve.
“Our internal goals will certainly be higher than that.”
Product driving parlay increase
Robins noted in a shareholder letter that NFL parlay mix as a percentage of total handle is up 5 percentage points. That came from a mix of marketing improvements in how betting options are presented as well as more options in general.
“A lot of it is product. We’ve introduced a lot of new features. We have live SGP markets across NFL, NBA and other sports now, so a lot of it is just product and product availability.”
DraftKings is “definitely” seeing some early encouraging signs from NBA, Robins said. Baseball should see an improvement, too, with home runs similar to how DraftKings focused on touchdowns for the NFL.
More micro betting products coming
DraftKings is acquiring its micro betting partner, Simplebet, which it announced in August. That was partly to bring costs in-house as well as taking those markets to another level, Robins said.
“We do have a lot of micro betting offerings now, but I think a lot of what we’re going to develop going into next year will really be at the top of the market and I think will separate us and really differentiate us on the live betting side,” Robins said.
While live betting does bring a lower hold than pre-match betting, it drives engagement to help offset that shift. And there are still places in DraftKings’ live betting product where hold can improve, he added.
Robins on new potential markets
With the election in the rearview, Robins said legislatures are now starting to focus on their goals for 2025.
He mentioned some states that got close in their previous tries to legalize sports betting, including Georgia, Minnesota and Texas.
On the online casino side, DraftKings has its eyes on Illinois and New York for potential legalization next year. Maryland and North Carolina could also be in the mix in the next year or two, he added.
DraftKings online casino is currently in five markets including Michigan, New Jersey and Pennsylvania.
