Category
🥇
SportsTranscript
00:00Welcome back to Newswire.
00:04We've got Sam McQuillan with us from Legal Sports Report.
00:07We've got some earnings reports to talk about specifically
00:09FanDuel.
00:10We'll get to that in just a minute.
00:11But let's start off with Sam bringing him back on the show
00:14here second time this week Sam.
00:15Thanks for coming on.
00:16Let's dive into the very latest.
00:18You've had now some time to unpack the story about DraftKings
00:23where a couple of weeks ago they come out and they say hey,
00:25look, if you win money with us, we're going to take a very
00:28small piece of your pie and you won't even notice it.
00:32That got a lot of backlash social media everywhere else.
00:35They decide to pull the plug on that making that announcement
00:38a couple of days ago Sam and you know, obviously you're
00:40reporting on this stuff, but you also have an opinion clearly
00:43on this.
00:43Why do you think DraftKings decided to go from one extreme
00:47to the other here?
00:50Yeah, Craig.
00:51It's been an eventful last couple of days since DraftKings
00:55first announced the surcharge which really caught a lot of
00:59people off guard.
01:00It was going to come to states like New York and Illinois,
01:02Pennsylvania that have high taxes on sports betting.
01:06So they've talked for a while about you know, passing this
01:08down to the better in some way.
01:09No one thought it was going to be an actual fee that shows
01:13up on your bet slip.
01:14A lot of people thought hey, maybe they could just make
01:15the odds worse.
01:16So I think that's one of the most interesting parts here
01:18is why they chose to do this whole announcement and then
01:21a few days later they decide hey, just kidding.
01:24We're not going to go through with it.
01:25Now that announcement actually came a couple hours after
01:28FanDuel said that they would not be considering such a fee
01:32which a lot of people had speculated.
01:33Maybe if FanDuel does it and DraftKings do it, you'll have
01:35the two biggest players in the market kind of leading the
01:38way and it won't impact DraftKings as much.
01:41But with FanDuel saying we won't do it, that left DraftKings
01:43pretty much on an island and they came out two hours later
01:47and said we're not going to have it.
01:48So if I had enough space right now in my home studio to
01:51take a victory lap, I would.
01:53You know, I predicted that FanDuel wouldn't do this.
01:55Why would they? They really had no reason to.
01:57They've been weathering the storm in high-tax states just
02:00like DraftKings has.
02:01So really interesting to see them come out and say hey,
02:04we're not going to end up doing it.
02:06Now we have some fallout from that.
02:07How is that going to affect their business going forward?
02:10They had projected that they would lose about 50 million
02:12dollars just the next four months from Illinois raising
02:16its tax alone.
02:17So does that mean they're going to lose a hundred fifty
02:19million from Illinois next year?
02:21How are their investors going to react to that news that
02:24they won't be making up this money in that way?
02:26Then are you going to have the fee being passed down to
02:29the betters just in a different form?
02:30Is it going to be worse odds like we talked about in
02:33the past? And quite frankly, I'm wondering why that hasn't
02:36why that wasn't the case to begin with.
02:38Maybe that means it's too hard for them to do.
02:40Maybe that means it's completely off the table.
02:42So there's a lot of burning questions kind of in the
02:44wake of DraftKings rescinding its announcement.
02:47Now the stock is back up a little bit today to about
02:50$33 a share.
02:51It dropped 18% after the news that they would add the
02:54surcharge just two weeks ago.
02:56So it was a big impact on the stock market.
02:58Some people were thinking maybe they were just testing
03:00the waters, but why test the waters if you know, the
03:03stock is going to react so much.
03:04So DraftKings different than one of those companies like
03:07Caesars different than Flutter, which owns FanDuel even
03:09and really they are beholden to their investors.
03:12There's a lot of pressure to show a profit, especially
03:15because the US and online sports betting and iGaming
03:17are really their only operations.
03:19They don't have other sectors of the business.
03:21They can lean on as much like these other companies.
03:23So I think it's really interesting that they decided
03:26to get a do away with this thing, but now it's going
03:29to be even more interesting to see what happens as a
03:31result in these states, whether it's bettors, whether
03:34it's investors.
03:35It really impacts a lot of people.
03:37Yeah, and you're right, Sam.
03:38It's you know, to me instead of taking your announcing
03:41that you're going to take some winnings.
03:44I mean, you could just go from minus 110 on all bets
03:48to minus 112, you know, like I understand that that's
03:52noticeable just like taking the money out of people's
03:55winnings, but it's not unheard of on a lot of these
03:57books to have different odds.
03:59And if that's what you're after especially from novice
04:01people, I mean, it seems to me that would have been
04:04the smarter thing to do and not that I'm endorsing
04:07that but I very odd operation.
04:10I would say an announcement and everything else
04:12from now.
04:12I think we can agree on that.
04:13All right, let's get to FanDuel.
04:14Let's talk about FanDuel.
04:16They have some announcements coming.
04:17I know you guys wrote about this over at Legal
04:18Sports Report that their growth numbers are in as far
04:21as this latest quarter.
04:22What did they report?
04:25Yeah, so aside from the news that FanDuel wouldn't
04:27be adding the fee, there was some really big takeaways
04:29from Flutter's earnings call.
04:31They reported 47% of the total US online sports betting
04:35market and 41% of the total US iGaming market, which
04:39great numbers for FanDuel.
04:40It continues to be in the number one spot.
04:42They had about one and a half billion dollars of
04:45revenue in the US versus DraftKings which had about
04:481.1, so ahead of them there and about 3.4 average
04:52monthly users on FanDuel versus 3.1 for DraftKings.
04:57So the CEO of Flutter, Peter Jackson, talked about
05:02their ability to add more customers but then at the
05:04same time get even more revenue from those customers.
05:07Their acquisition was up about 30% in the quarter
05:12but revenue was up about 41% which they attributed
05:15to a number of benefits from product enhancements,
05:18product changes.
05:18These are things like having more people placing bets
05:22on the NBA that are live bets as opposed to pre-match
05:25bets. They had about a 4% increase in handle that
05:28was live as opposed to pre-match and that's important
05:31given the fact that live betting is a lot more profitable
05:34for sportsbooks.
05:35They have a higher hold rate generally, which is why
05:37you've seen companies like FanDuel, companies like
05:40DraftKings try to push live betting more and more
05:42lately, whether that's in promos that they're giving
05:44out to people, whether that's in investments they're
05:46making in the product with companies like SportRadar
05:49which have really touted their live betting capabilities.
05:52Parlays in the MLB were also up about 8.4% year-over-year
05:57which is a huge increase from last year.
06:00You know, if you know anything about the sports
06:01betting industry, parlays are really where they are
06:04making their money on these high holds that we're
06:06seeing compared to back in the day when you know
06:09about 6% hold in Vegas would be really good.
06:11Now companies like DraftKings FanDuel are getting
06:13you know, 10 to 12% just from people betting these
06:16basically these lottery tickets, these $5 bets that
06:19would be you know, $300, $400 something like that.
06:22So that was up and WNBA betting as well was up
06:24about 400% from last year.
06:27Obviously WNBA has been a lot more popular but FanDuel
06:30also made a lot of significant investments in its
06:33WNBA product.
06:34It's one of the two partners with WNBA.
06:36So more to come on those fronts as well.
06:38I'd imagine, you know, they're just going to roll
06:40their winnings over and keep betting on product
06:43changes, product enhancements as they continue
06:45to grow their customers.
06:46So really good quarter for FanDuel and obviously,
06:49you know with the surcharge news as well, they're
06:51riding high right now.
06:52Yeah.
06:53Yeah, no doubt.
06:53And again, they got out front and said we weren't
06:56going to employ this surcharge and I think maybe
06:59FanDuel looked more positive upon for that.
07:02Okay, Nebraska sports bettors have to go in person
07:05to make bets, but I know that they've been pushing
07:07to get this online for a number of months.
07:10How much closer do you think Sam that this is
07:12getting?
07:14Yeah, it's getting closer from the standpoint that
07:17there's a lot of support behind it happening.
07:19The problem here is so much support is needed for
07:22this to happen and more importantly needed for it
07:24to happen anytime soon.
07:26A Senate committee in Nebraska advanced a bill
07:30this week that if it gets to the Senate floor, the
07:33Senate votes on it.
07:34It'll essentially allow voters to vote on the
07:36ballot if they want sports betting, but everything
07:38else is what happens after that.
07:40They need about 80% of the full Senate vote for
07:43this to pass.
07:44If they don't get it, they need 60% for it to pass
07:48in 2026.
07:49So a lot of support is really needed here because
07:51of the nature of changing a gaming law in the
07:54state like Nebraska is really difficult.
07:56If this does get to the ballot people would have
07:58to overwhelmingly approve it and then lawmakers
08:01would then come back in January 2025 to then
08:04figure out how sports betting is all going to
08:06work, what the legal framework would look like.
08:09So there's a ton of steps, a ton of you have to
08:11approve this for us to approve that for us to
08:13approve this.
08:14So it's still pretty far away in Nebraska.
08:16You only have four casinos getting placed bets
08:19out right now, but things are progressing in a
08:22good direction.
08:22It's just going to be a very, very slow direction
08:25if you're in Nebraska and you want online sports
08:27betting.
08:27So it'll be something we monitor for the rest of
08:29the year as it continues to unfold.
08:32All right, Sam.
08:32Well, thanks once again for coming on the show.
08:34A couple times this week.
08:35We'll catch up with you next week here on Newswire.
08:38Yep.
08:38Thanks, Greg.