DraftKings CEO Jason Robins Talks World Cup Customer Retention

Get essential news on the people and companies pushing the tech sector to new frontiers. Hi, I'm Ed Ludlow, join me for Bloomberg Tech, a daily podcast focused exclusively on technology, innovation and the future of business. Every weekday we bring you the latest insights on Silicon Valley's top companies and conversations with tech's biggest decision makers. Listen to Bloomberg Tech on your commute home and stay ahead of the news cycle. Subscribe today on Apple, Spotify or anywhere you listen. Okay, ending the week with more tech earnings, draft kings reported disappointing second quarter earnings amidst growing competition from new prediction market players like Kalshi Butt. There's some post momentum post world cup setting up a pretty strong back half stock up 7.5% on track for its best day since June 26th, dropping CEO and co-founder Jason Robbins joins us. It's interesting, right? Initially, that was the reaction, disappointment, second quarter earnings. There were favorable sports outcomes. There was promotional spending. And then this morning everyone was like, actually, what the world cup seems to have some tailwind with it? Well, I think that really what you're seeing is that after having all the time to digest and hear some of the contacts, people understand how strong a position draft kings is in from a business perspective right now. Our core business contract to do about $1 billion in adjusted EBITDA this year. Just a few years ago we were losing money in that business. Now it's a very strong cash flow generator for us. And we see really strong traction on predictions. Enormous growth over the last month or two and the best time of years about to come with a fall season and NFL and everything that that brings. Okay, bear with me. But apparently people were betting on whether you would say "couchy" on the earnings call. Prediction markets are a factor. Just react to that Jason, please. Well, I, you know, making trades on whether someone is going to say something on earnings call probably isn't something that I think should be out there, in my opinion. But never the last I understand it is I didn't know that though I didn't read it. I don't remember. I don't think I said that. No, I said. No, no, no. Hopefully not too many people took the positive side of that one. Jason, can you just explain the World Cup? How it manifested for draft kings, the behavior of people that went to draft kings during it and whether there is some momentum carried out of it for the second half of this year? I mean, World Cup on pretty much every metric that we look at exceeded our expectations. We acquired more customers. That was both true of predictions, but also true of our online sports betting business. We are way better than we expected from an acquisition standpoint. We ended up having much more efficient acquisition to our CACs. We're 25% lower than we expected. Total engagement was big. We had a really strong increase in Mupps as we published in our report. So I saw a really strong post-World Cup engagement. Probably the most exciting thing to me because a lot of people are probably thinking of us included this World Cup audience. Are they going to stick around or is it sort of come bet on the World Cup trade on the World Cup and done? Not at all the case. July, we actually saw a 20% handle increase after the World Cup ended, which is enormous number compared to where we were going into it. So you're absolutely right. I think a lot of momentum coming out of the World Cup, right going into our most important time of the year. It couldn't have been time better. Jason, very quickly, those were people that went to drawthks maybe for the first time in the World Cup and then stayed. A lot of them were people that had played previously and activated and continued to play afterwards. Remember after NFL and sometimes a lot of customers go dormant. So these big moments are really great opportunities to get people to engage with the product again. And you never know if they're going to drop off or not. We see that sometimes or if they're going to continue. And at least for the World Cup audience, it seems like both the new customers and the ones who reactivated are continuing to play through July. And I think coming into August and September and we have our most busy time of year, it's going to only continue. Jason, in prediction markets, the field of players seem very focused on how they communicate with the under 21 category. What is drawthks policy and approach basically to marketing to that demographic quickly? Well, I think this is an important distinction between drawthks and some of these other companies out there. We are not, as you see, some of them doing marketing that you can pay your rent money in marketing to college campuses on fraternities and things like that. We are focusing on marketing to adults in position. This is an entertainment product, which I think is the right way to do it. And listen, those are things that right now are getting a little bit of scrutiny and I think eventually they'll get rained in, but that's not up to us. But I do think it's something that we feel like we are really, you know, as a long time trusted brand that's been out there for a long time and pleased the long game and really understands, you know, it's not as much as it might get you short-term volumes. That's not what you want to be doing in marketing on college campuses and things like that. Drawth King, C Jason Robbins. Thank you very much for your time on Bloomberg Tech. Hi, I'm David Weston. Join me every week for the Wall Street Week podcast to hear stories of capitalism from around the world, from geopolitical tensions and central bank decisions to artificial intelligence, energy and infrastructure. We sit down with the CEOs, economists, policymakers and thought leaders whose decisions are shaping markets everywhere we find them. Subscribe to the Wall Street Week podcast on Apple, Spotify or anywhere you listen.