Across two days of keynote interviews during last week’s Global Gaming Expo in Las Vegas, NV, CNBC’s Contessa Brewer interviewed five different gaming CEOs on a range of topics including the MGM cybersecurity attack, the Kentucky Derby, F1, and daily fantasy sports.
Here are the highlights from each of the interviews:
FanDuel CEO Amy Howe and DraftKings CEO Jason Robins
FanDuel and DraftKings are each other’s biggest rivals but the companies’ CEOs Amy Howe and Jason Robins sat together for an interview. They also agreed that their companies would like more clarity when it comes to the definition of DFS across the country.
Robins confirmed DraftKings did not receive a cease and desist letter in Florida despite other operators being told they were not allowed to offer the same products DraftKings and FanDuel offer on the DFS side. Nonetheless, Robins went on to say DraftKings was mostly concerned with fair treatment across the board.
“We want to understand what the constraints of what we can offer are and I think that is part of where we are right now in the space. There’s going to be people, companies that are pushing the limits, and I think for us…having clarity, again, it comes back to competition. We want to be able to compete so we want to be able to offer the same things that anyone else out there offers. Then once you do that, it’s competitive and great for the consumer and whoever has the best experience, that’s the best operation comes out on top. So I think for us, you know, having clarity on what we can do, what we can’t do is important. And I think the same goal should be applied to everybody.”
“There’s a legal and regulatory framework and I think it’s up to the states to adjudicate this,” Howe added. “I think they will decide whether those offerings are within the legal framework. And there’s a clear distinction between games of skill and games of luck, so I think it’s really up to the states to adjudicate that.”
When pressed that FanDuel and DraftKings were in similar situations as sites like PrizePicks and Underdog several years ago, Robins agreed he could relate but both he and Howe reiterated the importance of internal controls relating to KYC, underage players, and other protections that are not guaranteed in the unregulated space.
“One of the things about regulated markets is there’s friction put in place for consumers. That’s part of regulation, and it’s deliberate and there’s a reason for it. It’s to do things like preventing minors from getting on and stuff like that. So creating an experience where you are minimizing the friction for the people that you don’t want to create friction for that actually are the right people responsible gaming, age, all those things, and still having the appropriate controls in place to protect the vulnerable to make sure miners aren’t using the product eight that is a lot trickier than a lot of other products that don’t have that same constraint, but it also creates an opportunity to really figure out how to innovate and create,” he said.
Bill Hornbuckle, CEO of MGM Resorts
MGM Resorts head honcho Bill Hornbuckle used some of his time to tout the upcoming F1 race in Las Vegas and the recent report from the AGA noting strong commercial casino performance, but obviously, last month’s cyberattacks were still top of mind and a large portion of his discussion with Brewer.
Hornbuckle said the disruption cost the company $100 million but did note cyber insurance will cover the losses. With a laugh, he did point out though that he can’t imagine how expensive next year’s premiums will be.
“It’s corporate terrorism at its finest. You don’t wish this on anybody,” he began. He then offered some new details of exactly what happened to cause the level of disruption to the company.
“You saw us shutting down systems by our own design. What ended up happening is, the criminals literally understood what was happening and they shut the balance of it down for us. And we found ourselves in an environment where, for the next four or five days, with 36,000 hotel rooms and some regional properties, we were completely in the dark. I mean literally the telephones, the casino system, the hotel system, the key system, and I could go on and on and on were not functioning. And so you put the company to the test.”
While it was an unwanted stress, Hornbuckle lauded the company’s response, particularly its unwillingness to give into the criminals’ demands.
“We’re proud of what we did. We did not pay ransom, not that that’s the defining moment in one of these things. I know people say don’t pay a ransom. But the way this came at us and the velocity at which it came at us, we reacted quickly. We protected data. We find ourselves now a couple of weeks into this thing fully functioning.”
Bill Carstanjen, CEO of Churchill Downs
While Churchill Downs CEO Bill Carstanjen had plenty of positives to discuss with the company and the 150th running of the Kentucky Derby next year, his interview spent a chunk of time focusing on why the company ultimately decided to pull out of the B2C sportsbook business. As he explained, the group certainly didn’t come in with trepidation.
“At first, we thought that everything we’d learned about horse racing online directly translates into our sports. For those of you that know a bit about our company, our TwinSpires business is a really powerful, great business with really high margins, and it’s an online highly profitable business. So we thought those lessons that we learned building the business from the ground up would translate directly into sports betting, but they really haven’t. That’s been an entirely different model,” Carstanjen reflected.
When pressed by Brewer to explain the differences in the model, he cited the high costs associated with operation.
“I think the marketing that’s gone into it, the technology, the fact that you need partners in every state to gain access to every state, there were a lot of mouths to feed.”
While many other organizations were willing to invest in that long runway, he explained CDI just has a different approach to the business.
“We’re very margin driven, whether you look at our online business, our brick and mortar casino business, or the Derby itself, we’re a very, very margin-focused profitability, business. So the long haul you needed to sign up for online sports just didn’t feel right for us once we got into it,” he said. “But also, we were always conflicted because we also are a big content provider. We provide horse racing for other people’s platforms for them to wager on our content. So we’ve always had this balance between do we want to be a B2C sports wagering business or do we want to provide content to the sports wagering platform? That was always a push and pull in our organization.”
Jette Nygaard-Andersen, CEO of Entain
Entain CEO Jette Nygaard-Andersen spoke on a range of topics, including why she thinks the popularity of same game parlays is more connected to the American appetite for lottery rather than fantasy sports. However, the highlight of the conversation was when Brewer asked Nygaard-Andersen the question always posed about Entain’s joint venture with MGM, BetMGM–are the two companies really never going to merge?
“You’re operating at MGM as separate entities is like parents trying to raise his child but parents with very different parenting philosophies,” Brewer said. “Bill Hornbuckle told me on CNBC this morning, it’s a great marriage, his exact words. But wouldn’t it be better if you were closer?”
Nygaard-Andersen’s initial response got quite a laugh from the crowd.
“There are many ways to raise your children, I guess? And it is a great marriage. And we work really well together. The combination of intense technology and experience from online sports betting and iGaming across the world with MGM’s brand, omnichannel experience, and their reward database–It’s a really, really strong combination. We work really well together and we’re fully focused on what we want to achieve. We’re very competitive, so we want to make BetMGM the best it can be. And there’s nothing in the structure today that prohibits that or makes BetMGM go slower.”
US is by far the biggest sports betting and gaming market in the world with a long runway for growth, so we are fully determined and dedicated to BetMGM here,” she added. “Now, I get it, joint ventures don’t last forever. But for now, it’s not something that we don’t need to solve for.”