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DraftKings, FanDuel TV ads return along with live sports

Yahoo Finance’s Dan Roberts joins Zack Guzman to discuss the return of live sports as ads from DraftKings and FanDuel return.

Video Transcript

ZACK GUZMAN: I'm not sure if you've been watching the return of sports, of course, a lot more to watch out there with the return of NBA action in the bubble, as well as the MLB's shortened season.

But if you have been watching, you may have noticed a few ads coming through from DraftKings and FanDuel, both betting giants throwing some serious money into getting ads in front of sports fans. Right now and here to chat about why they're doing that, is Yahoo Finance's Dan Roberts. And Dan, I guess they're both saying now is the time to strike.

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DAN ROBERTS: Absolutely. I mean, they were desperate for sports to come back. And it's funny, you said in your intro that they are betting giants. And that's fine. That's accurate. But look how much has changed in just the last few years, because for a lot of people, seeing these ads come back-- and boy are they back. I mean, I noticed that during the NBA, some of these ad blocks have FanDuel and DraftKings ads back-to-back in the same adblock.

I mean, they're really back in full force. But for those of us who've been watching and covering these companies for years, we remember back when they were doing this in 2015, it was an onslaught. And of course, that was both good and bad for the companies. It was good, I guess, because it got their names out there.

But it also caught the attention of lawmakers. And that's why suddenly all these politicians went after them. And the reason they were in trouble was politicians accusing them of their fantasy contests being, basically, betting. And they were saying, no, no, we're not betting operators. Well, now fast forward, and the Supreme Court struck down PASPA, which is the federal ban on sports betting.

For now, they're very much saying, yep, we're betting operators. And a lot has changed. I mean, DraftKings went public by merging with an SPAC. and that stock has done very, very well. FanDuel sold to an Irish betting company, Paddy Power. And yet, some things haven't changed, because here they are, direct competitors, and they're advertising like crazy. And that costs money, and neither company is profitable yet.

ZACK GUZMAN: Yeah, we talked about that too. FanDuel's CEO on the show last week, talking about why he would want to dump all this money in, because we think about the growing opportunities here, not just with sports betting, but also online gaming. They convert these people from betting on games maybe into just doing blackjack as well.

But that seems like a high-growth opportunity. But you're right, haven't reached profitability, so I guess, I mean, whether or not they start to see revenues start coming in through some of this stuff, I guess it would change the timeline here for how much money they're willing to spend on ads.

DAN ROBERTS: Well, absolutely, I mean, that's kind of what happened a few years back. They spent way too much on advertising. And that's why it has taken them so long to reach profitability. At some point, both of these companies at different times in their history have needed big infusions of VC money to keep going.

And then, of course, they had their exits, basically, one by selling, one by merging and going public. But it's interesting. I mean, these companies during the start of the pandemic, when there were no sports, were out there saying, don't worry. Don't worry. When sports return, we think we're going to see a huge bump. And we think that there's pent up demand, which sounds a lot like a certain someone in the White House kept saying, there's pent up demand.

And in some ways, I think they've been right. I mean, we'll have to wait and see what numbers they share. DraftKings has its first earnings report later this month as a public company. That'll be very interesting. But they're right in the sense I think betters were desperate for sports to come back to TV and have things to bet on.