Matt King, FanDuel CEO joins the Yahoo Finance Live panel to discuss the Sports betting outlook ahead of Super Bowl Sunday.
- A few more days to go until the big showdown in Tampa. And that means huge opportunities for sports betting operators like FanDuel. Sports gambling raked in $1 billion in revenue last year. And it's expected to grow sixfold over the next few years, according to at least one estimate.
Let's bring in the CEO of FanDuel, Matt King. And Matt, I'm curious to hear more about what kind of bets that you are seeing on the Super Bowl. But let's first talk about the activity. No question you are seeing a huge ramp up going into the big day. What are you anticipating?
MATT KING: Absolutely. And we've been setting acquisition records for the last few weeks. We've been setting volume records for the last few weeks. From an activity basis, we're seeing most of the money be on the Chiefs.
People love the player props on the Super Bowl. So markets like Travis Kelce to score the first touchdown are the most popular. And we'll expect to see a significant amount of live betting throughout the game.
Zack Guzman: You know, we had Joe Theismann on the show yesterday really talking up the Chiefs, big fan apparently. Didn't know that. But when you look at maybe some of the new betters coming in, how big of a driver is it for maybe customers that you hadn't seen on the platform before since we know the hype and attention around the Super Bowl as is all time in sports?
MATT KING: We'll see a lot of new first-time customers on the Super Bowl, but frankly throughout the playoffs. Particularly like the championship round were just such great games that we saw a ton of customer acquisition through those periods as well. And so really, I think the NFL has had a great kind of postseason period. And from a sports betting perspective, it's been no end of great games.
- I'm curious to hear more about the growth that you are seeing in the space. Of course, the Super Bowl is taking all the attention this week, but we've seen a number of states legal sports betting nonoperational operational 20 states, as well as Washington DC. And what we've seen floated around during this pandemic is some states may be flirting with the idea of legalizing for additional revenue, given the budget crunch they're facing right now. I wonder how you see that dynamic, and if that opens up opportunities for FanDuel.
MATT KING: We think there absolutely will be opportunities. If you look at the pace of new state rollouts, it's been accelerating. So we launched Virginia and Michigan within 18 hours of each other in the last few weeks. And those states are off to an incredibly strong start.
And so as we look forward to the upcoming legislative season, you're right that states are trying to find any source of revenue that they can, given the fiscal pressures from COVID. But also frankly, as they look at the experiences of states like New Jersey and Pennsylvania, what they realize is that legalizing sports betting is just common sense legislation in the sense that it generates tax revenue from the state, and it also brings the illegal market and makes it legal.
So it encourages consumer protection. And so it's really a win-win piece of legislation. And I think you're seeing people understand that. And therefore, you're seeing a lot more states consider legalizing sports betting and also frankly are iGaming.
ZACK GUZMAN: Yeah. It's so weird to see kind of the same arguments lining up. What we're seeing play out on the cannabis front, too. Specifically, it's the same states, you know, New York dealing with New Jersey next door legalizing cannabis and sports betting. And they're sitting there wondering, why can't we get ours here with our tax revenue, too?
So we have heard Governor Cuomo come on board and say, look, I want these things changed so we can participate as well. But the same themes there around profitability because, you know, you guys have been pretty active on some of these offers to new markets. I think I saw in Detroit you're offering Pistons fans 100 points.
Basically, like, it was max $50 bet on that game. But against the Lakers, it's essentially giving them free 50 bucks. How sticky are the customers that maybe come on the platform through something like that? Because obviously it's going to get them to maybe place a bet if free money is on the table. But where do you go from there?
MATT KING: They're very sticky. I mean, we deliver the best user experience in the market. And what we see is even after the promotions run out, people keep coming back. When you look at it, sports betting has been a timeless pastime. That's why it existed in the illegal market.
And so people love to do this. They love how it complements their sporting experience. And so we're seeing the players stick around really, really well. And a lot of the promotional activity that you're looking at is very similar to what happened in any of the major kind of disruptive digital businesses.
So I think it is a pattern that I think most consumers understand, which is, we entice you to sign up. And then over time, we're going to deliver you a great product. And if we do, you're going to stick around.
ZACK GUZMAN: Yeah. And obviously you guys aren't the only one out there. DraftKings also kind of doing a lot of the same things in trying to attract customers in new markets. So I mean, when you look at the competition set right now, the competitive set, and kind of stack up in terms of what some people on the outside-- we heard the same thing about cannabis companies trying to get new customers at all costs, kind of a race to the bottom.
What's your estimate around that in terms of how much longer you'd go maybe offering some pretty crazy promo deals to attract these new customers? Do you see that playing out for the next couple of years?
MATT KING: So I wouldn't call them crazy promos. I mean, we do everything in a very analytic way. And so we understand the cost to acquire and the lifetime value of customers. So some of those crazy promos that we do like, we're really well known for something called Spread the Love, which I think is the promotion you were citing in terms of the number of points that we're giving.
It's crowd funded social promotion. And what we found there is we really don't have to advertise it. And so what we're doing is instead of running a bunch of TV commercials during that period, we're really just giving that money to our users. And we find it's a much more fun and efficient way to get new people on the platform.
- Matt, Zack hinted at this huge opportunity that could potentially be coming down the pipeline later this year, with New York expected to legalize mobile sports betting in the fall. You've probably gotten a hint of what that potential is like seeing the growth in New Jersey. But give me a sense of what it means for FanDuel. Or is there a number that you can point to? What are you anticipating when New York gives a green light, if New York gives the green light?
MATT KING: So it's a great question, I had a lawyer always give me a good piece of advice, which is, any piece of legislation is 50-50 until it actually passes. So the way we look at the world is-- you can see the number of states that are considering sports betting. And you have big states like New York, but you also have big states like Texas starting to talk about it as well.
And so we're very confident that we're going to continue to see a material expansion in the market. And so we think that you're going to easily see a doubling or tripling of the number of states or the percent population that currently has access to mobile sports betting over the next few years.
- It certainly seems like the momentum is picking up, at least if you look at where the legislation is. Matt King, CEO of FanDuel. It's great to talk to you today.