Why DraftKings CEO Said Company Isn’t Interested in Price-Shopping Bettors
Rich Graessle/Icon Sportswire via Getty Images. Pictured: Citizens Bank Park.
Earlier this week, DraftKings CEO Jason Robins got ripped for saying the company wasn't interested in bettors who price shopped since they didn't turn out to be the most profitable.
The notion expectedly brought the wrath from the gaming community, which commonly says that the massive sportsbooks are not interested in allowing good bettors to bet.
Robins is pretty damn smart, and my belief is he knew exactly what he was saying and how it would be perceived by the small population that thinks sportsbooks should take on all.
First, let's look at exactly what he said earlier this week at the Canaccord Genuity Digital Gaming Summit in its complete context. It's a lot, but it's worth the read.
"A big question that everybody asks, especially when you see money going into consumer acquisition, how sticky will these players be? What will the (lifetime values) be? We look at two- to three-year paybacks on players too, for the only reason being that we don't have more data.
… But as far as what we're seeing and as far as research goes, there's definitely evidence that players coalesce onto one product. Certainly there's evidence that there's downloading and trial of different apps, particularly in the early phases of a market. But usually, what we see in research is that most players favor one app and direct the vast majority of their game play there. And the ones that don't are more the ones that you really don't want, they're bonus hunters and odds shoppers, and it's a very small fraction of the audience. It's less than 10% of the audience. But those are not the most profitable customers for obvious reasons."
All of that is the truth. But those in the gambling business seemed to be shocked that Robins was so transparent with how the best business wasn't in fact taking on every bettor — pro or Joe.
So why did he say it?
He said it because he's at a summit with an audience made up of analysts and investors, and the biggest threat to his public company is the lack of belief that the promotional money being spent is going to yield profitability.
The market is down on that idea. Even with $2 billion in cash, investors are worried about bleeding money and whether DraftKings can get to profitability three years into entering a state. DraftKings stock has slumped 34% in the last month alone.
Being frank about what their research has borne out and how the company achieves profitability is more important to voice transparently here than it is to worry about the perception from a vocal few who criticize the company for not being a true book and for cherry picking customers.
Simply put there's 99 out of 100 people who are interested to know how promotions yield customers and how DraftKings can win. And Robins is saying here that good promotions lead to the best customers who download DraftKings and stay on DraftKings no matter what odds they put up. And for the 1 out of the 100 who is going to cry bloody hell that the company is a fraud of a book? Well that doesn't matter as much when shares of the stock are the lowest they've been in a year and a half.
How would you rate this article?
Follow Us On Social
