DraftKings NASDAQ: DKNG CEO Jason Robins said the company has quickly become a top-three player in prediction markets after launching DraftKings Exchange only a few months ago, while emphasizing that its established sportsbook business remains central to its strategy amid legal uncertainty surrounding sports event contracts.
Speaking with CNBC correspondent Contessa Brewer at an industry event, Robins said DraftKings has gained share despite offering prediction products in a more limited set of states than some competitors. DraftKings does not offer sports prediction markets in states where it holds sports-betting licenses, a decision Robins said protects the company’s regulated gaming operations and relationships with state regulators.
Prediction-market growth and legal uncertainty
Robins said DraftKings sees itself as positioned to benefit whether sports prediction markets remain broadly permitted or face restrictions through court decisions. He said the company has not made prediction markets its sole business, unlike some companies that are more dependent on the category.
“We actually feel like we put ourselves in this win-win spot where no matter what the outcome of that whole process is, we are well-positioned going forward,” Robins said.
He said DraftKings would like to offer all of its products to customers, including both sportsbooks and prediction markets. Even if sports contracts were restricted, he said the company sees opportunities in non-sports categories such as elections and financial markets.
Robins said DraftKings was “pleasantly surprised” by interest in financial markets, an area he said he had previously underappreciated. The company plans to further develop its non-sports prediction offerings over the coming months before promoting them more heavily, he said.
Asked whether the lower-tax nature of prediction markets makes that model particularly appealing compared with state-regulated sportsbooks, Robins said he expects states could eventually seek to tax a permanent sports prediction-market business. He also said traditional sportsbooks offer a better overall experience for most customers, citing the continued dominance of sportsbook wagering over exchange-based betting in Europe.
Unified wallet and product strategy
Robins said DraftKings’ work on sportsbook technology and product development helped accelerate its prediction-market rollout. Certain technology components could be adapted for prediction products, while years of customer data and testing helped the company understand product design and messaging, he said.
The company has also moved to combine multiple offerings within a unified app and wallet, allowing customers to access products such as sportsbook, Jackpocket, prediction markets and iCasino without separate accounts or deposits where available.
Robins said the strategy is designed to reduce friction for customers and has become more practical as technology has improved app performance and personalization. He said DraftKings uses artificial intelligence and machine learning to make content more relevant, such as surfacing Milwaukee Brewers-related offerings for a customer who regularly engages with that team.
“If we’re not using the latest technologies to do that, we’re not going to live up to our customers’ standards,” Robins said.
Responsible gaming and marketing concerns
Brewer asked Robins about reporting that DraftKings uses AI to target losing customers. Robins rejected that characterization, saying the company’s use of AI is often overstated and that machine-learning tools are used to tailor relevant content rather than encourage harmful behavior.
He said DraftKings operates a responsible-engagement team that reviews accounts when the company identifies potential signs of problematic play. According to Robins, the company uses the same responsible-trading tools in its prediction products that it uses in online sports betting, even when it is not required to do so.
Robins said he personally reviewed the customer history cited in a ProPublica report and found that DraftKings had sent “hundreds” of responsible-gaming notices and that a VIP host had repeatedly offered options including cooling-off periods and deposit limits.
He said the company generally seeks to encourage customers to take voluntary action, rather than automatically restrict accounts in every case, because behavior patterns can be difficult to interpret and voluntary limits may be more effective than restrictions that could lead a customer to another platform.
Investor outlook
Robins said uncertainty around the legal status of prediction markets may be limiting investor enthusiasm for DraftKings’ growing presence in the sector. He said investors may assign more value to the business as the company demonstrates growth in non-sports markets and as legal outcomes become clearer.
“Public markets are the opposite,” Robins said of private markets’ appetite for uncertainty. “They do not like uncertainty. They want predictable, steady earnings.”
Robins said DraftKings expects to report earnings in two weeks.
About DraftKings (NASDAQ:DKNG)
DraftKings Inc is a digital sports entertainment and gaming company that operates online and mobile platforms for sports betting, casino gaming and daily fantasy sports. Its offerings include the DraftKings Sportsbook, DraftKings Casino and daily fantasy contests covering a range of professional and collegiate sports.
The company also provides related entertainment and media content through DraftKings Network, along with free-to-play games, promotions and other interactive products designed to complement its sports and gaming platforms.
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