Speaking at the third annual Craig-Hallum Online Gaming Conference, DraftKings CEO, Jason Robins, says he is "keeping a close eye" on ESPN Bet's launch.
DraftKings CEO Jason Robins isn’t concerned over ESPN Bet’s launch, instead claiming it could be a positive for the market.
ESPN Bet, a product of a $1.5bn (£1.2bn/€1.4bn) deal earlier this year between Penn Entertainment and Disney-owned ESPN, launched across 17 states on 14 November.
The ESPN Bet mobile app was downloaded over a million times in the first six days after its introduction. This was no doubt helped by the busy sports calendar of Thanksgiving week.
Unfazed by the competition
Despite ESPN Bet smashing the record for sportsbook downloads, Robins is unfazed by the competition.
Taking time during his presentation at the third annual Craig-Hallum Online Gaming Conference, he re-affirmed DraftKings’ position as one of the top two operators in North America alongside FanDuel.
“[It’s] not the end of the world in the short term. We watch this stuff very closely. We’ve seen nothing to suggest that our trajectory is changing, but its obviously something we’re keeping a close eye on.
“We’ve had many waves of competition, I think in the past [we’ve seen] some aggressive and even at times irrational competitive behaviour. I’ve not seen that now. I think they’re [ESPN Bet] playing for the long term, not to come in, make a splash and disappear.”
The hope for DraftKings is that ESPN Bet will bring new innovation to the market, as well as new industry talent. “I think that’s good for everybody if the overall TAM [total addressable market] is growing.”
He added: “If anything, I feel like we’ve just reinforced that no matter what happens competitively, no matter who enters the market, if we stick to our playbook, good things will continue to happen.”
Strength of product
Robins believes DraftKings’ product is the reason for the company’s continued success, stating: “We’ve seen lots of waves of competition. I think our expectation is that this is a competitive market. We’re going to continue to have to fight for the customer and build great product.
“Typically, best product always wins. And if you have a product that is just clearly sort of viewed as best in class, you get all sorts of organic benefits to LTV [lifetime value] and CAC [customer acquisition cost], which then reinforces the advantage.”
Although Robins was always confident over DraftKings’ prospects, he conceded he was surprised at just how quickly they have become North America’s leading sportsbook. He explained: “The consolidation of market share, I think [we] definitely expected that to happen.
“We’ve really outperformed on that front and it’s really reinforced to us that we can actually achieve really outstanding share in this market.
“The degree to which it’s yielded benefits and really the speed with which we’ve been able to gain share, I frankly thought it would be a longer grind than that. We felt like it might take five years, six years, seven years to get to the level of share that we’re at today.”
Progressive parlays on the agenda
Progressive parlays, which offer sports bettors the chance to win consolation prizes, will also be launched in the coming weeks.
Parlays, which offer a reduced payout, even if all the legs don’t hit, are seen as a beneficial move. He added: “It’s weeks away, so we’re getting close. I’m excited about it, because it’s differentiated.
“The opportunity to, even if you don’t hit every leg of your parlay, be able to win something. I think it’ll really scratch an itch in the customer demand. We have a high degree of confidence it’ll work because it’s been tried in other places.”
Igaming a key area of growth for DraftKings
DraftKings overtook rival sportsbook FanDuel for the first time earlier this year, reaching 31% in market share in igaming during the third quarter of 2023 through August.
Robins is delighted with DraftKings’ progress in igaming. He added: “It’s a very significant chunk of our revenues and that’s only in five states.
“So really for me, igaming is kind of the unlocked or the hidden, gem of DraftKings. We’re very bullish on igaming.
“I think it’s something that is a hidden gem and we’re investing a lot behind that product. It’s something that we intend to continue to compete in and try to gain share.
“Initially, I thought, igaming, we were going to have a hard time getting close to 30%, but that’s where we are.”
DraftKings still at net loss for earnings
In November, DraftKings raised its guidance for the third consecutive quarter this year after posting revenue and adjusted EBITDA growth in Q3, also reducing net loss.
Its launch in Maine last month means DraftKings is now live with mobile sports betting in 25 US states. The brand also saw monthly unique players increase 40% to 2.3 million in Q3.
Surprisingly however, DraftKings remains in the red for the year. This is despite a 57.40% rise in revenue in Q3.
Notably, its net loss of $283.1million was significantly lower than the $450.5m in Q3 of 2022. Its greater operational efficiency suggests a stronger chance for net profitability for H1 2024. This was indicated further with adjusted EBITDA loss reduced from $264.2m to $253.4m.
