NFL kicks off with all-time high numbers to bet on season
73 million Americans plan to bet on the 2023 NFL season, according to a survey from the American Gaming Association. This is up over 56% from last season. DraftKings (DKNG) Co-founder and CEO Jason Robins joins Yahoo Finance to discuss the growing opportunities in its market share as more states legalize digital sports gambling. Robins explains how its product and customer experiences are key to not only keeping its current market share, but continuing to grow it.
Video Transcript
- The 2023 NFL season kicking off last night, with a close game between the Detroit Lions and the Kansas City Chiefs. And it is expected to be a record-year for the sports betting industry. 73 million Americans planning to bet this season. That's up over 50% from a year ago.
For more on this, I want to bring in DraftKings Co-founder and CEO Jason Robins, alongside our very own Josh Schafer. Jason, it's great to have you here. Thanks so much for joining us once again, as we kick off this NFL season. I know the season is extremely important to you, but give us a sense of the activity that you saw on your platform last night and what that really signals for the season ahead.
- I mean, it was another record-year to start NFL, really just huge year-over-yer growth. Sunday's going to be even bigger, but very exciting to see. There were a lot of new customers that came in, a lot of existing customers that deactivated at the end of last NFL season came back. So, really pleased with the start.
- Jason, you ran a promotion last night, where if a bettor were to bet on the Lions to win or to bet on the Chiefs to win, and they opted in the promotion, as long as that team got up by 7, the bettor gets cashed out early. So both sides of that bet actually cashed out, even people that bet on the Chiefs. If they bet and opted into that, they cashed out. How does that process work with coming up with those promotions, and at what point does that promotion become too good? Because you guys have to pay out both sides of that bet.
- Well, you know, I think, that one, in particular, is cool because you do end up where you can pay out both sides, so it can be expensive. But also, for the bettor, you end up with people that no matter which side they bet, they won.
And it's also pretty cool, if you feel like, you know, hey, I just snuck that in by 7 points. If it had been 8 points, it wouldn't have made it. So we like that. I mean, listen, promotions, there's a certain budget that we have for them.
We like to do it in a way that gets maximum engagement from the customer. So this one seems to be one that people like. We did it last year, and people really responded well. So we brought it back. And it's always fun when it hits on the first game. I think that'll create some nice buzz.
- And Jason, another, sort of, trend we're watching going into this season is there some new entrants coming into the sports gambling market, right? We've got Fanatics coming in. ESPN is going to be getting in with a deal with Penn.
I'm curious how you keep dominating that market share and stay atop the market share, as you guys have over the year. You've gained market share, just through 2023 alone. How do you keep market share with new entrants coming in? Is it those promotions, or what sort of leverage do you think you can pull?
- Well, you know, I think, really, we just have to do the best job executing across product and customer experience. And I feel like that wins the day. Obviously, there's a lot of other things. As a business, we need to do well. We need to be very analytically driven in our marketing.
We need to make smart decisions across all groups. But I think that people will really gravitate over the long run. We've seen this in pretty much every digital product in existence, that best product wins. Because on the internet, it's easy to compare. And so, people talk, and they see.
And I think that we've really invested there. And we're, I think, at the point in time-- at this point in time, I think we have the best product in the market. And it's only going to get better. So what I tell the team is, you got to stay ahead of everybody.
There's going to be new-- guess what, it's a valuable space, so there will be competition coming in. People are going to want to see what we've been doing and copy it. So we need to be on to the next thing and the next thing, and we need to be doing it faster and at a higher quality level.
And more than anything we, need to be keeping the customer at the center and making sure that we're giving them what they want and giving them the best experience. And if we do those things, I think we can beat any competition. And I look at it, we're barely a little bit above 30% market share.
That's almost 70% of the-- excuse me-- share, I should say GDR share. That's almost 70% still out there to get. So we feel like we have a lot of upside, and we can compete with anybody. And you know, listen, it's always going to be new competitors coming.
Even if you look at more mature markets, there's always competitors coming and competitors leaving, and that's just part of being in a competitive space. But I think it brings out the best in the customer experience. And that's really what you want. So you know, like anything, like sports, we just got to be better than the other-- the other players on the field.
- Jason, there certainly has been a focus when it comes to DraftKings and really other players within the space about getting to profitability. And when you talk about those incentives, how do you strike that balance between offering incentives, so you're growing your business, but then, on the other hand, not overspending.
- Well, I think there's a few things. First, a lot of the incentive cost comes during the customer acquisition phase. So just naturally, as time goes on, that comes down. If you look at our more mature state cohorts, we've shared some data on this.
That rate just naturally comes down, even if we don't optimize anything, just because there's less new customer promos once you're in a market for a little while. I think-- meaning the promos are still there, but as a percentage of your revenue, as a portion of your customer base, existing customers make up more.
The other piece is we're constantly optimizing. We're always looking to say-- I mean, the early win example, you brought up earlier. How can we take that budget and do more with it? So we've already told the team, look, as time goes on, it comes down. I mean, at a certain point, it won't-- it'll hit a plateau, but it's going to come down.
So you have to be figuring out along the way how you get more impact for the dollars that we're spending. And I think that team's really risen to the occasion. They've tested a ton. We're constantly testing things. I mean, we have a great engine for testing and optimizing. And so, I think that's really the secret.
But the nice thing is that there is that natural tailwind. No matter what state you look at, as it matures, marketing expense comes down. Promo expense comes down. Revenue keeps growing. And therefore, you get this inflection in contribution profit that really is more than just the revenue or player growth.
- Jason, I have another promo question for you. Because I'm always getting this question from people. It seems like whenever there's something promo before the game, especially if it comes up right before the game, like, say, last night, Kelce's out. Maybe a prop bet on Mahomes to throw over under 250 yards.
And for the first time, and it feels like forever, Patrick Mahomes doesn't throw for over 250 yards. How-- how are you guys so good at the pricing? How is that happening in that way that you can promo that so perfectly, where it feels like it's a no-brainer. Patrick Mahomes, over 250 yards-- I think all of us would take it. Seana would take it.
- Even I would take it. I'd fall for it.
- It sounds so good, and then it doesn't hit for, it feels like the first time in forever. How does that work?
- Well, people bet on both sides of it. So we lost on it, too. But I think, really, we're just trying to set the most accurate lines, and we have teams that really spend night and day building models, making adjustments, as they see activity in the market.
So it's a very complex and, you know, mathematically-driven operation. But there's also a lot of people involved to making decisions along the way. And generally speaking, on a lot of those things, there's also a market.
If you look around, you're not going to see drastically different pre-game lines for most of the major players anyway. So that's an element of it, too, is the market kind of gravitates to where the betting is and where, ultimately, the line should be.
- All right, Jason Robbins, always great to have you, CEO of DraftKings. Thanks so much for hopping on with us. And of course, our thanks to Josh as well.
