DraftKings CEO Jason Robins said the company is positioned to benefit whether sports prediction markets remain available or are ultimately curtailed by courts.
During a fireside chat Tuesday with Wells Fargo, Robins said the company is “just watching, observing” the legal landscape involving prediction markets. He said the company will continue to make choices to stay in a competitive position regardless of how the legal landscape shakes out.
“It’s funny, if you ask me: I’d rather see them stay, but if they got shut down by the Supreme Court tomorrow, our share prices would pop,” he said. “We’re in a good position either way. We’re set up regardless of the outcome.”
Whether the Supreme Court ultimately restricts sports event contracts, Robins said DraftKings want clarity, although the company is not actively involved in ongoing legal fights across the country. There are multiple requests for the Supreme Court to weigh in on the issue, including ones from the state of New Jersey, Robinhood, and Crypto.com.
“We don’t control that process, only the choices we make in how to invest and think about long-term value creation,” he said.
DraftKings secures PM market share
Robins said DraftKings has secured double-digit market share in sports prediction markets in its active markets.
“We’ve gone really quickly from objectively not the greatest prediction market to the best sports product,” he said.
Robins said the platform has attracted more than 1 million customers and he expects that to grow to “multiple millions by the time the NFL season is over.” He noted the company has three times the NFL offers as competing prediction markets platforms like Kalshi and Polymarket.
He said the prediction markets industry is similar to the online sports betting ecosystem of 2021-2022, with lots of competitors believing they can have a material share of the market.
“We welcome that,” he said. “Our strategy is to win with our offerings, product and customer experience. We think we’re executing that.”
Robins said the margins on prediction markets are “a little lower,” but gross profit could be higher. Additionally, he said there has been “great cross-sell” from prediction markets to other products in non-sportsbook states, like Pick 6, daily fantasy sports and crypto trading.
DraftKings core business growth readout
Beyond prediction markets, Robins was bullish on the rest of the DraftKings business.
Through the first two weeks of the NFL season, Robins said the company has seen “enormous” handle growth of around 15% year-over-year. He said that is a good number given the “cannibalization chatter” around prediction markets heading into the football season. He also noted accelerating growth in iGaming share in legal markets.
“That core business is on track to deliver $1 billion in adjusted EBITDA and increasing in 2027,” Robins said.
He said a lot of small decisions and executions have helped regain market share in iGaming states as well.
“It’s a lot of little things and execution over a sustained period of time,” he said. “One or two don’t move the needle, but a collection of dozens or more over months or years add up. It takes time for customers to notice.
“We’ve done a lot of shake-up of who’s on the team, leading the team, product roadmap. That was almost 12 months ago and sustained execution and now we have tremendous momentum to grow on.”
All of the momentum has led DraftKings to consider spending more on customer acquisition this year. He plans to provide an update on that on November’s Q3 earnings call.
“It’s too early to say magnitude, but with exciting early [NFL] results, we do anticipate spending more,” he said. “It will be data-dependent, but we could see meaningful new investment and could accelerate revenue next year.”
