DraftKings CEO Jason Robins is ready to spend money marketing NY sports betting and will worry about profits later.
Robins, who last week tweeted “it’s not about the money” but about “achieving our goal of $1T market cap by 2032,” expects to eventually turn a profit in the mobile NY sports betting market – but not at first.
Robins: treat NY sports betting launch like other states
Even though the decision was not made until this week, most had an idea of who was winning last week thanks to a published report.
Robins offered thoughts on a hypothetical business plan for the state:
“If we were to be awarded a license, I think we feel just like we do in other states – that we can achieve the same long-term profit margins in New York. There’s a lot of levers we can pull such as cutting back on rate of promotion and spending less on external marketing. Those are things I would expect everyone in the industry would do because I don’t think anyone’s going want to run at a long-term unprofitable rate in any state.
“Certainly, early on, we’ll approach it just like we do other states where we’ll invest into it and look for that two-to-three-year path to profitability. But I think over the long term, we feel we can achieve something in a similar range to what we’re achieving in other states from a long-term margin perspective.”
DraftKings, of course, has no qualms losing money in the short term. The company posted a net loss of $545 million in the third quarter alone, with more than $303 million spent on sales and marketing.
Mixed comments from other NY sports betting bidders
Unsurprisingly, the companies expected to win licenses were more bullish on New York during conference calls this week.
Bally’s CEO Lee Fenton said New York is “not a market that you want to miss out on.” MGM Resorts CEO Bill Hornbuckle said time will tell how much money can be made but BetMGM will have a “huge presence.”
The most damning comments came from Penn National CEO Jay Snowden. Snowden called New York a “margin killer” and said “you’re not crushed” by not getting into the state.
Penn’s bid with Fanatics did not score high enough to be considered for a license.
High costs concern Pretlow
New York Assemblyman Gary Pretlow spent years working to bring mobile sports betting to New York. But he never expected the market to look like this.
Now he is worried the high tax rate will keep sending bettors to New Jersey sportsbooks:
“Free play is an integral part of all gaming. Every casino offers free play, the racinos all offer free play. FanDuel and [DraftKings] do free play in Jersey. They can afford to do it. So they’re going to give people free bets.
“Why would I bet in New York with worse odds and no incentives when I can go across the bridge and bet with promos and with benefits?”
Partnership announcements already started
It did not take long for New York betting partnership announcements to hit the wire Tuesday.
BetMGM and Madison Square Garden announced the brand is an official sports betting partner of the arena, as well as the New York Knicks and Rangers. The release does not specify an exclusive partnership so there could be more coming from MSG at a later date.
Caesars, meanwhile, announced a national partnership with the Manning family. While that partnership does not specifically target New York, there is an obvious tie there with former New York Giants quarterback Eli Manning.