MetroBet's Matt Burke again had the pleasure of catching up with DraftKings CRO and co-founder Matt Kalish, who touched on a variety of topics in a Q & A including: how DraftKings is currently winning the great online sportsbook race in the United States, expansion to new states, making a big investment in retail sportsbooks, the upcoming National Sports Betting Championship in New Jersey, and the company's overall plan for the sportsbook in 2019.
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What’s your current assessment of DraftKings sportsbook? Are you still meeting expectations, and where do you think you’ll be heading in early 2019?
We've continued to have a really good run in New Jersey since starting in August. The business has been great every single month. We’ve continued to bring on new players and grow our betting handle. We’ve had more winners than ever this month so we’ve maintained our position as the leader in the market – which has been our goal.
So, it’s a really exciting time. Six months ago we didn’t have a full team on the sportsbook so it’s been an amazing effort on a lot of fronts to recruit a great team and talent to make sure we’re able to compete in this new market. So, I’m really excited about all the progress we’ve had since launching.
You guys have had the most success out of the gate. Why do you think new sports bettors are drawn to DraftKings first and foremost?
There’s a lot of reasons. Over the years we’ve invested a lot of money in the brand and trust.
One of the big differences between the legal regulated market with sports betting and the black market is that there's sometimes not a lot of trust on the black market. It’s things like, if you win you want to get paid immediately. Same day. Next day. You want to know that your money is being held safely. You want to know your bets are going to honored if you win. All of this stuff.
Part of what DraftKings is always focused on is building the trust of players and I think we’ve done that better than everyone else. If you look at research and data for who customers think of when they think of winning money on sports – DraftKings is always No. 1 by far. So that’s a byproduct of all the effort that we’ve done in building a user-base and building trust over all these years. With the new sportsbook product I think it’s in some ways a reconfiguration of that relationship with our fantasy sports players.
For some people, they weren’t comfortable playing fantasy or it wasn’t their preferred way to engage with sports. So it also allowed us to go and acquire a ton of new customers with a name brand that was already well known.
Beyond that, I think it's the product experience we’ve built. We spent about a year going out and looking for the best technology platform we could get. Working on the user experience. We have an amazing tech team at DraftKings. Our team is mostly engineers, product people, analysts. It’s staff that I think is well-equipped to build a product that’s elite. So we’ve built a product that I think is – even though it’s version 1 of the product – has given us a strong competitive start.
What’s your current assessment of the sports betting landscape as a whole right now? And which states do you foresee having an up-and-running sportsbook in early 2019?
It’s so unpredictable because ultimately the decision to regulate is in the hands of the state legislature. So these states have a lot of different priorities, but this is one of them. It’s really high on the list. If you look at New Jersey, the results have been fantastic.
We’re really optimistic [with new states emerging in 2019]. We’ve been focusing on the education of it. Making sure regulators and legislators understand what the product is and that we’re protecting consumers. There are still a lot people betting on the black market, which is totally unprotected right now, so we’re showing them that DraftKings is a much safer way to play.
Last time we spoke we talked about pool betting and how DK was going to put a big emphasis on pools. How has that been going so far, and are there any type of different pools coming up?
Yeah, we have a great roadmap – I think – on pools. By having the most users like DraftKings does in the sportsbook we’re able to offer the biggest version of something like pools. So we put that really high on our list.
We started off by offering NFL-only pools and we added in a couple more sports like NBA. We want to expand it so that all of the major sports and big sporting events have pools. And we just want to test what sort of propositions people want to predict in the pools. So I think there will be several versions that aren’t just straight pick ’em. Like for the Super Bowl, "which of these two players are going to gain more yards? Which quarterbacks are going to pass for more? How many total touchdowns will be in the game?"
You come up with more creative props and play in the pool format. So you’re really starting to extend the platform, extend the product, so that it’s more about situations that come up in sports.
You guys also have the National Championship of Sports Betting coming up in January. Is it all taking place in Jersey City, New Jersey or can you also bet on your phone?
You can bet on your phone, yes. What we’ve done is we’ve set up a headquarters in Jersey City. That will be the home base for the event. We’re investing a lot in making sure it’s a really amazing event. We’re going to have great talent out there – professional athletes, media personalities. We’re going to make some announcements about that soon. It will be a party.
Everybody who is signed up for the event will be invited. They can come into Jersey City and participate in those festivities. And at the same time, you don’t have to be at the physical location because New Jersey has state-wide, global sports betting access. You can sign up for the event and you can play it from your house on your couch if you want. That’s totally fine as well.
We’re going to make sure the event is high-integrity and fair for all competitors. If you want to do it from Atlantic City or Newark that’s perfectly fine.
How big of a field do you think you’ll get for this event?
We actually have no idea, to be honest. It’s our first time doing this sort of event. The way these things work is that [X number of people] sign up the day before or the day of the event. That makes it really hard to predict.
We’re doing everything we can to get this event out in front for our customers to see. We’ve been doing some advertising to reach the audience we think will be most likely to participate. We’re going to put it out there, we’re going to market it successfully and I think it’s going to be a big success.
And I think we’re going to walk away with a lot of feedback that people would like to see next year, because it’s our first time doing it. We’ve done these events with fantasy sports over the years and you always come away from these events with ideas for improvements the next time.
You guys also opened up a retail sportsbook in Atlantic City recently. How is it doing so far and do you anticipate opening up other physical sports betting locations in other states when it is legalized?
This is a real investment we’re making into retail sportsbooks, it’s not just because it’s in New Jersey and it’s not exactly on the necessity basis. Our goal is to be the best physical operator as well as the best on digital.
We went out and recruited a great team. We hired [Las Vegas sportsbook operator] Johnny Avello from Wynn Casinos. We hired Frank Kunovic from Caesar’s. Both were overseeing the sportsbook operations at their respective casino organizations. So we got some of the people who are the best in the industry at doing this. And with the relationships that we have with casinos nation-wide we’ll be able to compete aggressively and get our product out there.
I think the interest in retail is kind of two things. The first is, a lot of business still comes in through physical properties. I don’t think it will be bigger than digital, necessarily. But it’s still a very big segment of what’s going on in New Jersey and will continue to be.
It’s sort of a different use case. There are still a lot of people who are comfortable betting in a more physical setting. Like they’re traveling and they have to be at a casino and they want that as an amenity while they’re at the casino. It’s sort of different from people who are sitting on their couch and watching a game and just want some skin in the game.
So I think we want to cover both audiences and make sure we have the best product for both.
We made a pretty big investment so that we don’t just stop at resorts, so that we can scale out to other locations. We also operate a physical book in Mississippi right now and we have a couple more coming. We reached a deal with del Lago Casino in New York to be their physical sportsbook. And there will be more to come. It’s a big investment, but we’re making it.
Do you expect things to taper off after football season? Obviously you have experience dealing with this with DFS. But how much impact do you think the season ending will have on the sportsbook?
Yeah, there’s definitely going to be some seasonality. We haven’t been operating for a year yet so it’s hard to say exactly what that will look like. But after the Super Bowl you’re pretty quickly into March Madness. One thing we’ve learned is that college sports are extremely strong with the sportsbook. There’s great interest and demand from consumers. College football some days was over 50 percent of the volume from NFL. It’s really strong in terms of the interest in college football.
We’ve had days where college basketball did more volume than NBA. March Madness, I think, will be an event that’s extremely strong for us.
And then you’ll get into the golf majors coming up – Masters, US Open. Baseball will start up again.
So I don’t think there will be a dramatic drop-off.
A year from now – heading into 2020 - what do you foresee as the landscape in the US with sports betting, and where do you guys hope to be as a company?
What we’re marching towards is we want to be the best place to play for American sports fans. We want to get our product into the hands of everyone in the geographies where it’s allowable. So any state that opens up we want to be there first or as close to first as possible. That’s really important to us.
We’re going to always make sure we’re playing by the rules. We want to make sure that our compliance programs are in line with regulatory rules. We want that to be flawlessly executed with zero issues.
And we need to hold a really high bar to make sure there’s that trust in the product. Not just with players but with regulators and lawmakers.
And in the case of physical sportsbooks we want to serve our partners really well. If we show up in a casino with a sportsbook we want to add as much value as possible to those partners and drive a lot of traffic to the property and make sure people have a great experience.
So really we just want to be thought of as the best place to play – physical and digital in the US.