DraftKings has taken the US sports betting market by storm. 2018 was a massive year for DraftKings, transitioning from daily fantasy sports to a multi-vertical gambling operator, the company has established itself as a force to be reckoned with in the world of legal US sports betting. We had the opportunity to catch up with the CEO and founder of DraftKings, Jason Robins, at ICE London to talk about what’s next for the company.
CB : 2018 was a big year for DraftKings. You expanded into the realm of online and mobile sports betting, announced plans to launch your sportsbook in different states, launched land-based sportsbooks and even launched a DraftKings Casino platform. What is next for DraftKings in 2019?
JR: First of all, we want to continue to invest in all of our products, we have multiple products now. We always had DK Live for DraftKings, which was fantasy sports orientated, but now we are operating multiple product verticals. We want to continue to invest in these products. We are going to add more features, markets and other aspects to the sportsbook. We are going to continue to try and expand into new states as they open up and we plan to add new games to our igaming platform. We are also planning to add more integration between our products with features like loyalty programs and account management, which will all be integrated as tightly as possible.
CB: The DraftKings Sports Betting National Championship was a fairly controversial event. What are your thoughts on how everything went down?
JR: It’s interesting. If you look at the overall feedback on the event it was overwhelmingly positive, yet all anyone wants to ask about is the alleged controversy. We always feel bad if anyone has a poor experience- that’s something that’s consistent with our company and brand values. We will invest money and resources, beyond what I think any other company in our space has done in the past, to rectify or make those experiences better- even with things that weren’t our fault.
It becomes tricky when there’s no win in the situation- in doing one thing you’re always going to upset other people. [The DraftKings Sports Betting National Championship] was a case where we followed our rules; we laid them out and it’s the first time we did it. The rules were that betting would end when the 4:40 PM EST game kicked off. Unfortunately, as luck would have it, the previous game ended just moments before the next one started. Certain types of bets cleared, but not all of them. We announced multiple times that the event was closing and that bets might not clear so [that bettors could] take the appropriate steps.
At the end of the day, we have to follow our rules. Of course, we don’t want people to have a bad experience. If we went back, we might have implemented a rule to find a way of grandfathering in bets for a game that didn’t end in time. But those weren’t the rules at the time. We are looking at the types of modifications we can make next year to prevent any negative customer experiences. In this case, it was only a small handful of customers with one, in particular, that was very upset about it- most people were not affected. It’s only people that went all-in on their bets and, unfortunately, we can’t change the entire leaderboard because that would upset the people that did win. We have to follow the rules and make sure that, in the future, these sorts of cases don’t happen. We don’t want any of our customers to have a bad experience, we’re not satisfied with most people having a great experience. This will be our second event, so we are still learning.
The thing about sports is that so many different things happen. In our first year, we had our baseball product, and we had to consider random scenarios like, what happens if there’s a rainout or delay and they finish the game later tonight or tomorrow. There are all these cases you have to account for, that you don’t always appreciate when you first assign rules.
CB: More and more states are introducing bills to legalize sports betting. What are your thoughts on the bill introduced by lawmakers in Massachusetts? Could you see DraftKings conducting sports betting operations there?
JR: We feel very good about the legislation that’s been introduced. It’s great to see the governor getting behind it. We really think that the framework he proposed around offering direct licenses in the Commonwealth of Massachusetts makes a lot of sense. Massachusetts is also our home town which makes it important to us, but it is also going to be a very large market- one of the largest. It’s important that it [legal sports betting in Massachusetts] happens in a way that makes for great customer experiences, good environments for companies like us to operate in and also generate revenue for the state. We think that what they proposed is going to accomplish all three of those very nicely.
CB: DraftKings launched its first land-based sportsbook in Mississippi last year. What are the plans for land-based sportsbooks going forward?
JR: Although things change every day, right now there appears to be a mix of different approaches across states. Some will choose to move forward with online and mobile offerings from day one, while some will only allow retail initially, and then potentially open up further down the road. Our goal is to offer our product to customers, in whatever ways the constraints allow, to provide the best experience possible.
This may mean that, in some states, there is a heavier focus on retail, or that there is a mixed focus between retail and online. We are constructing our organization so that we have great products and great people working on those products. This means that we can provide a great experience to customer, no matter the environment.
CB: How was the Super Bowl for DraftKings?
JR: The Super Bowl was tremendous, even though we lost money. It’s always good for the customer to win. It’s good to see that people got rewarded for betting on the Patriots. As a Bostonian and a fan, it wasn’t the worst thing in the world. I said to my team that we win either way: we either get a Patriots Super Bowl and lose some money, or we are just disappointed that the Patriots lost but glad that the sportsbook made some money. It was a win-win in that sense- for us being a Boston company and also for our customers winning over seven figures. We also had a massive influx of new customers on the platform. It was our biggest day outside of the NFL’s opening day, which is tremendous, but we also saw a surge of activity from dormant customers.
CB: How does the DraftKings casino platform fit into the rest of the DraftKings platform and plans for the future?
JR: As soon as we launched our sportsbook, we started getting a lot of feedback from customers that wanted to see some of the other games that are available in New Jersey, like blackjack and video poker, roulette and slots. Our goal has always been to try to respond to what our customers are asking for. It was clear they wanted this, so we started investing in this product. We launched our first beta tests around them a couple of months ago, and it went extraordinarily well. The numbers went beyond any expectation we had, so now we are looking at how to create a strong, and ultimately the best, offering as quickly as possible.
CB: Did you ever picture the company becoming a multi-vertical gambling operator?
JR: We always thought there was going to be an effect of getting the customer onto the platform, and that once they were on the platform, we had a means of transacting with them. As the customers had an affinity for our brand, they had engagement and a frequency of use, we knew we would be able to launch additional products. We always thought that, in the long term in the US, we could launch sports betting and other sorts of gaming products. You don’t have to look any further than the UK to see it’s a market that works and can be done in the right way if regulated and licensed properly.
We always felt that was the long-term destiny for the US. Could I have predicted it would all be developing as quickly as it is? No. In the interim, we thought of launching content and other offerings, but it all centred around the notion of being a multi-product platform. That was always the goal.
CB: What were the main challenges transitioning from daily fantasy sports to sports betting operations?
JR: A lot of the challenges were organizational. When you’re used to operating primarily in a single vertical, a lot of the necessary communication and collaborations happen naturally. When you start branching out, there’s a benefit to having a focus on different products where one team manages the sportsbook and one manages the fantasy products but there’s also integration and making sure that those teams have the right focus. In our operation, we push deep autonomy and decision making into the organization. We try to hire the best people. We want to empower people to do what they need to do, but sometimes you do have to be a little more top down. So organizationally, trying to make sure we have deep empowerment yet sometimes taking charge to ensure we coordinate on projects so they get done properly, can be a challenge.
Our goal, from a customer-facing perspective, is a seamless and integrated experience. We don’t want to make it difficult for people to the things they are trying to do. The limit under regulations means products differ from state to state, which makes it a little harder. That’s always a challenge, but there are always creative solutions. The team is constantly thinking of ways to bridge those gaps, but it can be challenging if the customer asks, “Why does it log me out after 15 minutes when I’m trying to follow my sports scores?” They think that we are the ones making that decision when, in reality, it is required by regulation.
CB: We have seen a lot of news in recent weeks about the Department of Justice and the change in opinion over the Wire Act. What does this mean for DraftKings?
JR: I’m not a lawyer, but what I will say is that we have always been focused on complying with the Wire Act. There was never any doubt that the Wire Act applied to sports betting, so when we launched our online sportsbook in New Jersey, and our retail sportsbook in Mississippi, compliance has been a must for us. That’s always been the case, and we will continue to do that across all our product verticals. From our perspective, it [the DOJ’s opinion on the Wire Act] has certainly raised awareness. There are definitely more people asking about it, but we felt like this was something we were addressing well before the recent developments.
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