Exclusive: DraftKings CEO on Illinois, Entain and an ‘expensive lesson’ in California
Taking part in Gaming America’s CEO Special – out next week – Jason Robins reflects on a number of hot topics.
Key Points
- Doing nothing was “not an option” for DraftKings in response to new Illinois tax
- After $20bn bid in 2021, Entain acquisition “would have been too much” for DraftKings
- California relationships remain strong, but 2022 provided an “expensive lesson”
- Read the full interview in the CEO Special edition of Gaming America next week
G2E is almost upon us. And that means Gaming America‘s CEO Special is almost upon us.
Next week, the September/October edition of our magazine goes live, featuring Nevada Gaming Control Board Chairman Mike Dreitzer, Poarch Band of Creek Indians Chair & CEO Stephanie Bryan, Superbet Brazil CEO Alex Fonseca and SportsGrid Co-Founder & CEO Jeremy Stein.
Headlining, though, is a face you will all know well: DraftKings Co-Founder & CEO Jason Robins, who joins us five years after already appearing in our CEO Special.
This is the sequel.
Robins on Illinois…
In our feature-length interview, Robins discusses everything from profitability to Saturday Night Live. But, below, we’ve selected a couple of headline topics – starting in Illinois.
Already live, the Prairie State has approved a first-of-its-kind sports betting tax rate. Indeed, for an operator’s first $20m in wagers, they will be taxed $0.25 per bet. After $20m, tax on every wager rises to $0.50.
DraftKings’ response was immediate: the operator would introduce a state-wide pass through on mobile and online bets placed.
“I see some operators have chosen to implement a minimum bet amount instead of passing the fee along. We’ll see what different solution works, but doing nothing was not an option. I look at it less as we hold the cards and more, the way they implemented the law, we couldn’t do nothing. If you do nothing, you end up losing money on a very high number of bets. We have many wagers that are $0.25, $0.50, $1, $2 and even $5. These are no longer going to be profitable.”
Robins on Entain…
In September 2021, DraftKings submitted a $20bn offer to purchase Entain – joint owner of BetMGM, and parent company of brands such as Ladbrokes and Coral. But a merger failed to materialize.
Would an alternate timeline have set the industry on a very different path?
“I think so. We would be in many, many countries around the world, which would have changed a lot in terms of where I would be focused. Obviously, I’d still have to focus on the US, but it would be a global business, which I think would be a huge difference. Upon reflection, it’s good that that didn’t come together. Not that I don’t think Entain is a good company. I do. It’s more that it would have been too much for us at the time to digest, while also focusing on competing in the US.”
Robins on California…
A year later (2022), DraftKings would go on to lose a key regulatory battle in California. It is worth noting here that defeat was not DraftKings’ alone – but the operator stood accused of underestimating the power of the Tribes.
Both Proposition 26 (backed by Tribes) and Proposition 27 (backed by commercial operators) were rejected by Californians. These bills attempted to legalize sports wagering within the state and brought an estimated cost of $450m. How does Robins reflect?
“Well, I definitely think it’s hard to look back and say we weren’t doing it the wrong way. We ended up learning a very expensive lesson, and the good news is the relationships there are as strong as they’ve ever been. It didn’t do any permanent damage on that front, but it definitely set us back. It took a few years to regain trust. Looking back, if we knew then what we know now, we would have done it differently. At the same time, sometimes you have to go through certain types of experiences to learn – and I think now we’re in a much better place because of it.”
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