eSports Legal Jason Robins: Controlling our own destiny April 10, 2019 By Tim Poole DraftKings CEO Jason Robins sat down with Tim Poole at ICE London 2019, discussing the operator's journey so far and outlining a growth path that has "never been clearer" It’s been a long road from where Jason Robins started out to the conference lobby we share at the Excel London. The DraftKings CEO has just finished a half-hour presentation on the company’s outlook: it wasn’t originally scheduled within the ICE London agenda, but timetables were shuffled to make room for the US exec. That’s how big of a draw Robins and his firm have become within the gaming sector. The scenario is a far cry from when he worked 100-hour weeks balancing his full-time job at Vistaprint with his new, little-known side-project. We ask if he ever foresaw DraftKings evolving into what it is today. “I don’t really think we ever imagined, at least this quickly, we could become as relevant as we have been and as large as we are,” Robins exclusively tells Gaming America. “I didn’t really think about it that way, more as a long grind. I thought maybe somebody will come and buy us out for $40-50m. But we didn’t think it was going to explode like this. It’s been an interesting and fun ride.” Now, the CEO admits it’s not quite 100-hour working weeks, but still a rather busy 70-80 plus. The workload is a sign of success, of course, as well as the growth DraftKings has enjoyed thanks to its huge share of the daily fantasy sports (DFS) market. But, once upon a time, DFS was a vertical under threat. In 2015, DraftKings faced scrutiny over false advertising and insider trading, before New York’s Attorney General ordered the operator and its main rival, FanDuel, to stop accepting bets in the state. The whole DFS industry felt the focus of the regulatory microscope and DraftKings’ attempted merger with FanDuel in 2017 was called off due to concerns over a DFS monopoly. “It was definitely a tough time,” Robins recalls. “We were very fortunate to have an incredible employee base and investor base, as well as a board and advisors helping everybody pull through it. At the time, it seemed quite stressful and scary.” The CEO, however, also looks back fondly on some unexpected positives: “Looking back, those issues were actually the best things to happen to us. First, it strengthened us; we can now say no matter how crazy things get, we’ve proven we know how to navigate complex, challenging situations. Second, a lot of that experience and the fallout from it is why we ended up getting regulated in so many different states for fantasy. “That then entailed us building state-of-the-art KYC, anti-money laundering protections and geo-location capabilities; having that in place while moving towards regulated gaming and sports betting is very useful. It’s a big chunk of work we’ve already done that other new entrants will have to spend time on.” No matter how much of an advantage DraftKings’ DFS database provides in its transition to becoming a multi-vertical operator, Robins is aware there is still an awful lot to learn in the world of gaming. The firm was the first entrant into the New Jersey sports wagering space and has generated impressive early results within the Garden State. Its recent National Sports Betting Championship though, still courted controversy as the result of some teething problems. As players fought for their share of a $2.5m jackpot, one NFL play-off game overran on the final day, meaning several bettors could not wager on the afternoon’s second contest as their entire bankroll remained in play. The incident attracted headlines of the wrong kind during a tournament which had otherwise run smoothly. Robins explains: “This is early, early days. To use a baseball analogy, someone said to me it feels like we’re only in the second inning. I said it feels more like spring training. “As typical Americans do, rather than look at Europe or the UK that have been through this, we like to figure it all out on our own sometimes. So people are not totally educated when it comes to sports betting. As an operator, while we’ve certainly done a lot to study how companies operate, we’re still learning too. “I think even a lot of people who have been operating for years in the UK will take for granted how it works in the US. Americans are different and so is the American market; partly because it’s new and because of the level of education.” At the same time, the DraftKings CEO does not shy away from defending the Championship, emphasising the event’s overall success. The episode is not the first anomaly to be seen from a DFS giant in the fledgling US sports betting market. FanDuel recently reached a settlement with William Hill for copying its “how to bet” guide, while it agreed to pay a customer $82,000 in winnings following a technical glitch back in September. For Robins, these early outliers do not represent the whole picture. He tells Gaming America: “We got overwhelmingly positive feedback on the Championship. A few outlets chose to write about one or two customers who didn’t have the best experience. We feel badly about that; regardless of the reason, we never want anyone not to have the best experience. We try when that’s the case to make things right, even if it’s paying money out of our own pocket. “In this case, it was one of those tricky ones where there was really no win. To adjust the results for one person meant to adjust it in a negative way for another. We followed the rules and it wouldn’t have been fair to start adjusting.” In a broader sense, “adjusting” is something Robins is more than prepared to do. In fact, there is clear evidence of DraftKings already adapting considerably to customer demand. Less than half a year ago, Robins was quoted as saying: “We’re not positioned too well in casinos.” The clear suggestion was the operator would not enter the casino vertical. Not only has DraftKings now joined the world of land-based sportsbooks, it has indeed incorporated DraftKings Casino into its New Jersey sportsbook app. It’s a fairly significant change in approach – one symbolising the operator’s “nimble” nature, according to Robins. He states: “A lot of customers had been asking us for casino. When I spoke about casino initially, it would have been right after the launch of sports betting. We’re very nimble as a company. As we got more information and data, it became very clear very quickly our customers wanted us to launch that product. Ultimately, they wanted the loyalty points that come from playing across DraftKings products. We thought it was important to retain customers and give them the best experience.” Domestic expansion is one thing, but what of DraftKings’ global aims? With so much promise being shown in the US gaming sector, the operator finds itself in an intriguing position. While companies can often be accused of lacking foresight by focusing purely on their domestic market, Robins believes looking outward may not be the “wisest” move right now. Sports betting regulation has recently been approved in New York – a state in which DraftKings has already partnered with Del Lago Resort & Casino – and a number of states are expected to follow suit in the coming months. As such, the CEO acknowledges international expansion is low on the priority list. In this case though, that’s not due to a lack of ambition. “Right now, the priority for us will be investment in new US states opening up,” Robins says. “However, depending on the pace at which that goes, international expansion is something we could focus on more heavily in the near term. It will 100% be something we focus on more in the medium to long term. “If you’d asked me a year ago, before the PASPA [Professional and Amateur Sports Protection Act] case was taken up, international expansion would have been really high on the roadmap. The main point is we absolutely believe, long term, we want to be a global company. It’s just a matter of prioritising the US, as a rapidly evolving and growing market. We have such a strong position there, it would probably not be the wisest move to divert our focus, unless that slowed down.” Much of our discussion with Robins so far has centred on traditional sports betting. But the fact remains DFS is still DraftKings’ forte. The CEO explains it forms the “bulk” of the operator’s revenue, with a “very heavy” focus being placed on the 41 states in which it can accept DFS wagers. Robins describes the vertical as “pretty important” and sees no signs of that changing. In terms of resources, the DraftKings exec tells Gaming America his organisation is trying where it can to use one team for both DFS and sportsbook. Marketing is an example Robins gives, providing the department with a “blank canvas” to try and onboard customers and create as much lifetime value as it can – within both verticals. Interestingly, that kind of strategy is not too dissimilar to the cost savings undertaken during a merger. Given FanDuel almost merged with DraftKings and was then acquired by Paddy Power Betfair in May 2018, we ask Robins if there is any M & A on the horizon. After all, in his own words, he envisaged being bought out early on. Could that be a viable exit strategy for the tech firm? “I never say anything’s off the table, especially in this industry, which seems to change by the day,” Robins speculates. “But it’s definitely not something I expect in the near term. Right now, we have a really exciting and clear growth path ahead of us. It’s actually never been clearer in the company’s history. “We should be looking at several years of sustained high growth. To me, it feels like the best way to approach a situation like that, given where we are, is to continue to stay as an independent company. Things do change – you could talk to me in three weeks and I could tell you something different. We’re always keeping an open mind but, right now, we feel pretty good about where we’re going and we like the idea of controlling our own destiny. “We also are potentially interested in looking at doing some M & A of our own. That’s where my head’s at now, with the caveat that it’s a very fluid industry.” As far as growth and market share are concerned, DraftKings’ control of its own destiny is indisputable – especially if it utilises its early-mover advantage in New Jersey and huge DFS database. Robins knows that will only happen if the operator avoids complacency following its strong start to life in gaming, which means the right noises are being made. The challenge now, however, will be monetising that growth path and market share, turning DraftKings’ early promise into revenue and profit figures capable of challenging the biggest players in the industry.