Draftkings CEO: ‘Massachusetts is going to be an awesome market for us’
DraftKings CEO Jason Robins joins Yahoo Finance Live to break down earnings, new sports betting markets, and the outlook for growth.
BRIAN CHEUNG: Well, the bets still coming in for DraftKings at least, where shares are rocketing over 11% this morning after the group not only beat its own guidance for the existing quarter, but upped its expectations for revenue for the fiscal year. And the big bump thanks to bettors willing to put a little bit more on the table, the average monthly revenue per player clocked in at $103 for the quarter up from $80 in the comparable quarter last year.
DraftKings CEO Jason Robins joins us live as well as Yahoo Finance's Josh Schafer. Great to have both of you on the show. Jason, just kind of break down exactly what you saw in the trends here for your company reporting a better loss than expected. What drove that specifically in the second quarter this year?
JASON ROBINS: Well, I think first we had a revenue beat. So some of that was just flow through to the bottom line. And then company has been really focused on trying to find cost efficiencies. Some of these are going to be just timing based. So they'll show up later in the year. But some are actual true cost efficiencies that are going to be realized fully, and some which are in categories that fixed costs and COGS will increase in future years as well.
JOSH SCHAFER: And Jason, I wanted to ask you a little bit about the macroeconomic backdrop right now. When you were on with us in May, you told us that inflation doesn't really necessarily hurt your business and hasn't really hurt gaming as a overall industry in the past. I'm curious why you think that is, and what sort of leads to that, and what that tells you about your consumer.
JASON ROBINS: Well, the vast majority of our customers are small dollar bettors that are going to be placing bets of $5.00, $6.00 on a game. And it's a great bang for your buck right. They get hours and hours of enjoyment. So it tends to be something that's quite sticky during periods of really any macroeconomic condition. We certainly have some higher end bettors too. And I imagine some of them are seeing their portfolios down. But I don't think prices at the pump are really affecting their lifestyle as much.
So I think it's the makeup of the customer base more than anything. And that's always historically been true of gaming as you noted. So we're always cautious. We're always not taking anything for granted. But so far, everything we're seeing is consistent with what has been common knowledge about gaming that really under any macroeconomic conditions, it's a very steady cohort of customers.
AKIKO FUJITA: It's steady. But Jason, I wonder if there's a flip argument to that to say, look. In tough times, some of your customers may want to stretch their dollars a little more. I mean, do you see a potential gain on the back of that? Have you seen any shift in behavior from what we've seen on the macro front?
JASON ROBINS: It's hard to say. I mean, I think if your choice is I could go out to dinner tonight and have a $100 meal, or I could put five bucks on the game and stay home and watch it, I think people might opt for that a bit more. So it's possible. Right now, we're just focusing on the things we control, creating great customer experiences, really great products, strong marketing based on analytics that we optimize constantly. All of those are the things we control. And I think anything else that might be a tailwind, that'd be nice. But we're not counting on it.
JOSH SCHAFER: And Jason, I wanted to hit a little bit on how your company is spending when we talk about advertising and marketing. We know obviously New York opened this year. There's going to be some more states coming down the pipe. Massachusetts, where DraftKings is, is likely coming as well. What did you learn from New York in terms of advertising and marketing spend? Are you going to be shifting that strategy at all when we talk about Massachusetts coming, Ohio, maybe California?
JASON ROBINS: Well, I think New York, due to the tax rate, is a market that we've pulled back quite a bit, as I think have other operators in terms of marketing. Of course, we'll spend a bit going into NFL, but not at the same level we would if it were a lower tax rate market. Massachusetts, I think, is going to be a great market for us. Obviously, it's our home base. We have a really strong brand here because people know we're a Boston based company. And those who've grown up or lived in New England know that New Englanders tend to really love their own.
So I think that we'll do quite well. I also think our big DFS database in Massachusetts will be very helpful. So I think we're really well set up here. I'd also add that for at least a little while, we've had an app in New Hampshire, which is the only one. And so I imagine some Massachusetts customers have already crossed over the border and have the app already on their phone. So we think we're in a great spot and Massachusetts is going to be an awesome market for us.
BRIAN CHEUNG: Jason, outside of the markets themselves, what's kind of your approach here when it comes to the content side of things? And we've seen your kind of other competitors like FanDuel say that they want to launch a 24 hour TV network ahead of the 2022 football season. I mean, you do have your own content already right now, video, tech stories, whatnot. How important is that to the growth strategy as you expand to other markets as well?
JASON ROBINS: Well, I think that there's so much synergy between media and what we do on the gaming side. How much of that is organic, how much of that is through partners, it'll be a mix. Certainly we have a lot of great partners that we do work with. But we've also started to have some of our own content too. We've also done deals where we've gotten the rights to content such as [INAUDIBLE] content that's created through Meadowlark.
So we really, I think, are building out in a very measured way. We want to do it in a way that doesn't cause us to make any huge bets. But also, we think it's a worthy investment because there is so much synergy and overlap between what we do on the gaming side and the media business.
JOSH SCHAFER: And Jason, when we talk about a 24 hour sports network, or building out a sports network as a whole, that's obviously a huge undertaking. Is that where you could see DraftKings eventually headed? Or no?
JASON ROBINS: I think that's something we're exploring. Right now, we're just focusing on building out the plan and getting great content out there. There's a lot of ways to distribute content now. Certainly, a network is one way. And really, our goal is to get the most distribution possible. So we'll explore a number of avenues, including that. And I think right now, we're very excited about the lineup we have and plans that we have for our media business.
AKIKO FUJITA: Well, Jason, we look forward to following that progress there. Jason Robins, DraftKings CEO. Appreciate your time today. And our thanks to Josh Schafer as well for joining in.