DraftKings CEO Jason Robins has claimed the company’s focus is ‘all about profitability’ as the US sports betting and igaming markets begin to mature.
Speaking at a fireside Q+A session with Stephen Grambling at Goldman Sachs 2022 Travel and Leisure Conference this week, Robins firmly positioned DraftKings’ targets toward becoming a profitable company following a fierce battle to gain market share and acquire high-value customers in the early days of state launches.
Asked about the firm’s path to profitability, Robins remarked: “I think the overall market has changed a lot and I think that actually plays to our strengths. But for, I don’t know, the last couple of years until about say four or five months, six months ago, seven months ago, market share was what we got asked at these conferences, how are you going to get your market share higher? Do you think that other players are going to take market share? Now it’s all about profitability.
“What works for us well there is, we haven’t really changed our playbook and we think our playbook actually thrives in this type of environment. We’ve stayed disciplined even when there were some, I would say, undisciplined behaviors happening with competitors.
“So we feel like right now we’re in the best position we’ve been in really since sports betting started in the US.”
DraftKings has made significant losses in recent years and, in its latest set of accounts for Q1 of 2022, the firm made a $467.7m net loss, up from $346.3m in Q1 of 2021. DraftKings shrugged this off as losses connected with its launches in both New York and Louisiana.
Robins was asked about the firm’s investments and cost management strategy in terms of new markets, and though he noted that it plans to ‘stay the course’ on its investments, he did concede that it must begin to ‘optimize faster’ and ‘do better at this stage of the business.’
He added: “Certainly that’s led to us focusing on efficiencies more than we have been, not just with marketing, but with everything up and down the P&L from COGS to fixed costs. So that’s been a big focus for us.
“I think on the product side, really shifting from – last year we had the largest technology project we’d ever undertaken with migrating to our in-house sports betting tech and product platform. That was a 15-month-long project that consumed a very large percentage of our engineering force.”
DraftKings has already disclosed its intentions to expand further into legal US territories for sports betting, with Maryland, Puerto Rico, Ohio and Kansas all key targets in the near future, which indicates more large-scale investments.
Another state that DraftKings is positive about entering in the future is California; Robins was particularly upbeat when talking about the legaliziation process in the state despite past troubles, labeling the process ‘exciting’.
He expressed that ‘the tax rate, everything is set in a very reasonable way because you can actually write the whole piece of legislation on the ballot, which is nice’ ahead of what he anticipates could be a launch before the 2023 NFL season.
Concluding his Q+A session, Robins dismissed the idea of raising further capital to develop DraftKings’ path to profitability, instead suggesting that the company could shut off some marketing operations and pull other levers to liquidize cash.
Rounding off his thoughts on DraftKings’ financial state and path to profitability, he asserted: “The plan is that we should get profitable on the current capital we have. Everybody has rallied around that. We have a multiyear financial plan. Everyone is committed to the numbers, not just for this year but for next year and beyond, and that’s what we’re going to do.”