00:00We should point out, before we get to the app and all that, I do just kind of want to
00:03talk about where Fanatics kind of stands right now in this space.
00:07I mean, obviously, DraftKings and FanDuel, your former employer, that you basically built up, I mean, that was the duopoly.
00:15Fanatics, gaming, blah, blah, blah, which I thought was relatively new, but apparently it's been around for three years.
00:19Forgive me, but give me a sense in just how much market share you've managed to sort of grab since
00:25you and Michael founded this.
00:26So we're sitting about 10 percent handle share of the U.S. sports betting market, about 6 percent market share
00:33in iCasino.
00:33So we are the fastest growing. We're the third largest.
00:37I'm really excited about where we are.
00:38You know, our kind of mantra is we want to build a better proposition for fans.
00:43So we're doing things like giving fan cash on every bet.
00:46We innovated a policy called Fair Play, which was all about injury protection.
00:50And fundamentally, like everything we do is done through the lens of how do we enhance the fan experience?
00:55What is the cost, though, to sort of acquire new customers now?
00:59Because I look at the competition and it's not just when we talk about you, Fanatics, FanDuel and DraftKings.
01:06But now, of course, you know, you have the actual prediction markets like CalShe and Polymarket doing their thing.
01:12You have other traditional sports books now trying to sort of get into the space.
01:17And I would think that just the competition over customers, over fans, has gotten more intense.
01:24It's certainly gotten more intense.
01:26I think we can all speak to we've seen a lot, all seen a lot of ads, probably starting with
01:30the World Cup all the way through now.
01:31I'd say a couple of things.
01:32One is we have a massive advantage because we have the Fanatics brand.
01:35It is a brand that most sports fans know.
01:38They trust it.
01:38And frankly, there is a an aspect of that brand where people want to do more things with Fanatics.
01:45And so when we started the business, we went out and said, hey, would you use a sports book done
01:49by Fanatics?
01:50And people said, absolutely.
01:51And so we have a massive advantage in the Fanatics brand.
01:55We also have a massive advantage in the sense that we are a second mover.
01:59And so we're able to kind of look and find the places where we can see value in terms of
02:03spending marketing dollars.
02:05But our fundamental mantra is I would always rather put a dollar back in a customer's pocket than spend it
02:10on a TV ad.
02:11And, you know, that's the way we've built the business.
02:13With regards to, though, that competitive landscape and the idea that it's not just about now trying to attract those
02:22users.
02:22You're also dealing with political backlashes and regulatory backlashes to the structure of traditional sports books, but more importantly, with
02:29prediction markets.
02:30How do you navigate that, not so much from a legal perspective, but also making sure that you're marketing in
02:35a way that's at least responsible to the current rules and regulations,
02:37but also with an eye on what the future rules and regulations might be?
02:41I think it's a great question.
02:42I've been in this business since the Daily Fantasy Sports Days, call it 2015.
02:46And so I learned a lot of lessons then that were, frankly, applying today.
02:50So I would say a couple things.
02:51One is we are very responsible in how we market and what we say.
02:55We talk about it as an entertainment product.
02:57We're very clear about the tools you have around responsible gaming and things like that.
03:01I would say the second thing is we're just conscious of the volume of advertising.
03:05Like you have to, you know, at some point, no matter how good your creative is, if you run enough
03:10ads, people will get annoyed.
03:11And you never want to be in a place where you are an annoyance in the context of something that
03:15people love, like football.
03:17And so for us, it's really about the proper positioning as well as being conscious of how we position ourselves.
03:24And frankly, just, you know, making sure that we avoid making promises that you can't keep.
03:27With the structure of your business, though, how do you navigate the idea that you're basically running a legal state
03:33-by-state tax sports, traditional sports books business?
03:36And now what I'm told, in quotation marks, is a federally regulated prediction markets business, and not to mention all
03:43the lawsuits flying back and forth that now appears to have finally reached the Supreme Court.
03:48Do you think that a Supreme Court decision on the case that just came out of the Ninth Circuit could
03:54provide a little bit more clarity for you and your peers when it happens?
03:57I think a Supreme Court decision will certainly provide more clarity.
04:01It may raise more questions.
04:03But I think, and I'm optimistic, that it will provide clarity.
04:06And I think in the meantime, you know, if you take out, if you turn down the volume of some
04:11of the lawsuits that are going back and forth, prediction markets and kind of gambling, the question is, are you
04:16regulated by the states, the federal government, or a combination of both?
04:20The reality is there's a lot of industries that are regulated by both.
04:23And so right now, as this is a new industry, we're trying to spend our time working with all of
04:29the various regulators, both state and federal, to chart a path that, you know, everybody's comfortable with while we seek
04:35the legal clarity that will come from the Supreme Court.
04:36You work with Michael Rubin, obviously, of the Fanatics founder, and he's obviously not a shrinking violet by any stretch
04:43of the imagination.
04:44Not sure what you mean.
04:45When you look at what Fanatics has become overall, it raises a lot of questions as to do you think
04:51that the betting business itself will just be a betting business?
04:55Or are there ambitions for it to, I don't know, morph into, I don't know, what, a media company, something
04:59else?
05:00I mean, what do you want to do beyond what you're doing now, if at all?
05:04If you look at the through line of what Fanatics does, we only get into businesses where we think we
05:09can actively make the fan experience better for somebody.
05:13And so in each of the individual businesses that we've launched, whether it's commerce giving you deeper access to merchandise
05:19and easier access to higher quality merchandise at a good value, whether it's the collectibles business and the incredible innovation
05:25that that team has done, or the gaming business where it was about how do you create a better proposition?
05:30All three of those businesses are about, we think we have a demonstrable way to make the fan experience better.
05:36And then as we've added more businesses, the other benefit is you start to see the ecosystem benefit of as
05:42fans start to do things in multiple verticals, it unlocks better experiences, more rewards.
05:47And I think for the first time, fans are starting to experience, oh, wow, there's a single digital sports platform
05:53where I can do everything around my fandom, and that makes my fan experience better.
05:57And the beauty of that is, if we can make the fan experience better, people already love sports, in making
06:03that experience better, we become a beloved brand.
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