DraftKings Thrives After March Madness: Record Profits

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00:00Okay. So, you know, March Madness has come and gone. Now the sports books, you know, they love

00:05to say that they're going to do amazing over the next few months, but let's be honest, they take a

00:09little bit of a breath before the football season with the end of the NBA and the NHL coming. But

00:14if you are a shareholder or if you are part of the DraftKings organization, it seems like you

00:19have a lot to smile about today. Yeah. It's interesting that we're talking about a positive

00:24for DraftKings after you mentioned March Madness, which, you know, you just can't talk about enough

00:29how crazy it was for the sports books, came after a really tough NFL season. You had the higher seeds

00:36won at an 82% rate. And that caused companies like DraftKings to have to cut the amount of guidance

00:44they're suggesting for the entire year. DraftKings cut it by more than $100 million from these

00:49customer-friendly sports outcomes. But despite that, they did have their most profitable quarter

00:54ever, which is really interesting, you know, when you're talking about losing a lot of

00:59sports outcomes. You're trying to think of how are they going to make money while they

01:03are getting hit with the higher seeds winning. For DraftKings, it was all about improving

01:07their margins, cutting down their promo spending. They have not been as generous with those,

01:12like you mentioned, Craig. Maybe taking a breath before some of, you know, the bigger competition

01:17during football season. So that helped them offset about $170 million that they took from

01:24unfavorable sports results. That's kind of the results coming in lower than expectations.

01:28And Wall Street was, you know, pretty confident in what they heard. The stock is up now, which you

01:34always want to look at how the market is going to react to this kind of news. Another big highlight

01:38for DraftKings has been live betting, which is something we've talked about being on the back burner

01:43a little bit for these companies right now. But this was the first quarter where there was actually

01:47more handle bet live than it was pre-match for a company like DraftKings. Overseas, that is very

01:54much the case. But in the U.S., that has not been the case yet. So they're seeing some good returns

01:58there from that product, which encourages higher margins. Customers are less likely to win on live

02:03bets. They're also more likely to reinvest their money with a sportsbook if they win and not deposit

02:08it and stay engaged, which is what they want you to do. So that's another really big path forward

02:14for DraftKings. Part of their vision there is getting people to live bet better. And that takes

02:18a lot of technological advancements, you know, decreasing the latency time and just making the

02:24experience better overall for customers there so they can feel more comfortable with it. So

02:29another pretty solid quarter for DraftKings, all things considered, when you talk about the sports

02:35results and going into the next quarter, now they're going to be trying to do some more of the

02:39same, expanding it to Major League Baseball and having that be a real focus before football

02:44season gets underway and we're really in the crunch of things.