DraftKings’ Five-Year Transformation

Five years after first joining us for his first CEO Special, DraftKings Co-Founder & CEO Jason Robins looks back on the journey since with Editor Tim Poole. From profitability to predictions, we cover M&A, Tribal relations in California, Illinois and much more.

When Gaming America last invited Jason Robins to take part in our CEO Special, DraftKings had just reported Q2 2020 net revenue of $71m. Fast forward five years and the industry giant has generated $1.51bn in revenue for Q2 2025, $301m in adjusted EBITDA and $158m in net income. Those numbers, each of which dwarf that initial $71m figure, speak for themselves. Back in September 2020, DraftKings had only recently gone public, New York hadn’t even legalized mobile sports betting yet and we were still in the midst of the Covid-19 pandemic. Much has changed since, not least further acquisitions from DraftKings – SimpleBet in August 2024, Jackpocket for $750m in February 2024 and a mega merger with Entain that didn’t quite happen.

The Robins household, meanwhile, has also grown in that time, with the DraftKings CEO now a father of five. Not only has Robins had two more children, his oldest is 11 – a “big difference” from when he was six. Robins has taken up golf, progressing from “I couldn’t even get the ball off the ground” in April 2021 to an approximate 15 handicap today. Life, therefore, is just as busy outside the boardroom as at DraftKings’ Boston HQ. “It feels more like a decade ago since that interview, but it was only five years," Robins tells Gaming America to kick off our CEO Special sequel.

“I think the industry and we as a company have gone through a lot of growth in that time. In many ways, when we were in the year or two before we went public, we were still a start-up. As we went public, we transitioned to a more mature company, but the market was still rewarding growth and profitability was not as important. The following year, we lost almost a billion dollars, but this year we’ll make almost a billion – just four years later. So, definitely, a lot has changed with the company.”

Indeed, from its origins in fantasy sports, to sports betting and online casino (with perhaps more verticals to come), adaptability has bred success for DraftKings.

The Proof Is in the Pudding

In truth, the timing of our interview could not be better for Robins. Having just reported its Q2 results, in which DraftKings generated the aforementioned $1.51bn in revenue – up 37% year-over-year – adjusted EBITDA of $301m and, crucially, $158m in net income, there is little room for me to nitpick.

“Q2 was really a historic quarter for us, because financially it was our record in terms of adjusted EBITDA and we had never done better than that,” the DraftKings Co-Founder & CEO beams. “Being able to make over $300m in adjusted EBITDA, which is more than double any previous quarter we'd ever had, only one year after our first year of profitability – two years ago we weren’t even profitable – that’s really something the team is very proud of. We obviously had some outcome favorability on our side, but we would have still had a big quarter even without that. It shows the power of the business model when we can get the hold rates up and have good cost discipline. We’re not growing our fixed costs and continuing to see our margins expand every year.

“In many ways, I feel like the business is both at the healthiest and strongest it’s ever been – and this isn’t going to be the peak. It’s poised to get better. We have really hit an inflexion point where the leverage of the investment we’ve made in the product and the trading platform has put it in a great place. In new states, we don’t really need to spend more on marketing, either. So this is the moment we’ve been telling investors about the last few years. At the same time, I also think we’re talking about just the current set of states we’re in. We have about half the country right now that we can’t offer online sports betting to. So there’s still so much more green field out there.”

The ‘P’ Word: Profitability

Robins’ mention of profitability is opportune. Many have questioned DraftKings’ profit-making ability – or lack thereof – over the years. For some time, the operator was a high-growth revenue generator bleeding money due to high costs. The situation was such that Robins regularly took to his own personal X, formerly Twitter, account, warning that investors will regret any DraftKings stock they sold off. Profits, he insisted, would arrive in the long term.

To all intents and purposes, Robins looks to have been proven right. Profitability, however, used to be something of a taboo ‘P’ word, with many asking when the company would finally make money – myself included – following a predictable pattern of quarterly revenue growth counteracted by quarterly net losses. I ask Robins if it was simply a case of being patient – and persuading investors to stay on board. Explaining his strategy, the DraftKings CEO gives a very real insight from the viewpoint of the business leader making the day-to-day decisions – and facing the resultant day-to-day scrutiny.

“In many cases, there are really not a lot of options. Sometimes you only have one option. If you’re fortunate, you may have two or three that are even reasonable to consider. If you rewind way back in our early days, we were not the first daily fantasy sports (DFS) company. FanDuel was one of the very first and really the first successful one, then there were probably about 20-25 DFS websites by the time we launched in 2012. So DFS is a two-sided marketplace, if you will. Liquidity matters, so being behind and being small is a huge disadvantage. We were in a position where we had no choice, I felt, but to raise a lot of money and try to catch up quickly before the bigger ones were too far ahead of us.

“We were asking what would happen if we attract new people to the market and then they’d figure out ‘FanDuel’s bigger for daily fantasy – I’m going to go play there.’ What we needed to do was catch up really quickly and, after raising a lot of money by 2015, we ended up doing that; now we are significantly larger than they are. We’re probably about four to five times as big as they are for DFS. We now have the biggest prize pools but, in those early days, I didn’t feel like we had a choice.”

“We Had a Way Worse Product”

The next stage of DraftKings’ journey brought a stark realization. With Paddy Power Betfair (now Flutter Entertainment) buying FanDuel for $158m in May 2018, DraftKings was, by comparison, going to market with third-party, and potentially inferior, software. Robins and his team “quickly realized we have a way worse product. And we weren’t going to win with a worse product.” That prompted even further investment, as well as subsequent M&A – DraftKings bought SBTech, announced in December 2019, as part of the SPAC deal that took it public. At the same time, Robins recalls, the likes of Caesars and Penn Entertainment were “just throwing marketing dollars around.”

“We had to make a big investment in product and marketing; I felt that was the only choice. If we don’t, we are going to end up losing and we’re not going to create the value we can create for our shareholders – even though I’m asking shareholders to hold on for a bit longer right now. Fortunately, at the time, high-growth, unprofitable companies were very much in vogue. That was part of the reason you saw Caesars, Penn, Wynn throwing money at it – because the market was telling them: we don’t care about profitability, we are just excited about growth. I would get questions from investors at the time, asking ‘When is this all going to stop?’ Well, it’s going to stop when you tell them to stop. You’re the ones feeding the money in, so once you stop doing that, people will react!

“And sure enough, from late 2021 to 2023, growth all of a sudden very much fell out of favor, and unprofitable companies like ours had a peak of $74 traded down to like $9.75 or something like that. We hadn’t changed the story, it was just a totally different sentiment. But the good news by that point was we already knew this wasn’t going to last. That’s part of why we went public; we raised money four times – billions of dollars. We had such a war chest at that point that we could afford to execute on our strategy. Even though nobody loves seeing their share price in the toilet, we didn’t really need to worry because we were not selling stock. I’m very proud of the team because that year, like I said, in 2022 we had almost $1bn in adjusted EBITDA loss. Two years later, we had our first profitable year. Then this year, we’ve said we’re going do around $900m. I think that’s a great turnaround: almost $2bn in just three years.”

Entain Would Have Been “Too Much to Digest”

Once we received confirmation Robins would be rejoining Gaming America’s CEO Special, there was no shortage of potential conversation points – as we’ve already seen. As we’ll also get into later, there’s still everything from Illinois to Saturday Night Live to come. And yet the first question that came to my mind was a thought-provoking hypothetical. 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. The offer prompted a high point for Entain stocks, as they reached $30.40 (at the time of writing, its share price sits at $11.26), while DraftKings was buoyed to a share value of $53.65.

But a merger failed to materialize. To this day, DraftKings has remained a US company. Much like Caesars, it does not rely heavily on huge international revenue streams from Europe or beyond. For Las Vegas Sands, by comparison, there is always an irony to note that a company with such an American name now only has properties in Asia. Acquiring Entain would have taken DraftKings into a number of markets worldwide. As things stand, Entain is live across several core European markets, with operations in Brazil and, of course, in the US itself via BetMGM. So I ask Robins: would an alternate timeline set the industry on a very different path?

“I think so,” he responds. “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.”

An Expensive Lesson in California

That US focus has, as we’ve already established, paid dividends – in more ways than one. Naturally, though, it has not all been smooth sailing for DraftKings. Historically, it has faced its regulatory battles as a DFS firm pre-PASPA – one that was also blocked from merging with FanDuel in 2017 on anti-competition grounds. In 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 of California, believing it could bulldoze its way into the market.

Within the Golden State’s delicately poised gaming landscape, sports betting is yet to be legalized. California’s population of 39.4 million makes it a would-be gold mine for regulated operators once this potential reality comes to fruition. But, three years ago, 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.

While the current climate sees Tribes take issue with sweepstakes operators and prediction platforms, there was a time when, due to Prop 27, DraftKings and FanDuel were declared public enemy number one. Today, both sports betting giants are spoken of in glowing terms. Victor Rocha, Conference Chair of the Indian Gaming Association (IGA) praised both at this year’s IGA trade show, whereas he told me firms like BetMGM and PrizePicks can “go and find the highest building and jump off.”

But that improved relationship has come at some cost – an “expensive lesson,” as Robins puts it. “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.

“But, you know, California is a great example. Obviously it’s more complicated, but I don’t think it’s a state that will forever not have online sports betting. I think it will. Good progress has been made and the Tribes are getting to a place where they’re coming together on a framework, too. There are still a few things to be worked out, but I actually feel like it’s moving in a direction that will ultimately result in California having online sports betting. There will be more states, not less.”

Illinois: “We Couldn’t Do Nothing”

Moving Eastward, Illinois made headlines in July by approving 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 – effective 1 September. After $20m, tax on every bet rises to $0.50. But more fascinating than this new system was the market’s collective response. Circa Sports, bet365 and ESPN Bet have since announced minimum bets or surcharges in the Prairie State. But FanDuel and DraftKings’ response was even more immediate: the pair would introduce a state-wide pass through of the tax on mobile and online bets placed. I put it to Robins: are DraftKings and FanDuel now too big to fail?

“I don’t think I would necessarily characterize it that way. I think it’s a very novel concept and I don’t think it was very well thought through,” the executive argues. “It doesn’t make sense to place a tax on a wager that’s greater than the expected revenue that’s going to be earned from the wager, and that’s what’s happening at the low-dollar transactions. 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.

“In some ways, I’m unhappy about it because I feel like it’ll mess up a lot of the market. On the other hand, we are going to see what happens – maybe customers will say the products are better and they’re okay paying a $0.25-$0.50 fee. Maybe it’ll be different based on what people are betting, meaning the lower-dollar bets will go offshore and maybe the people betting more won’t care because it’s a rounding error for them. It’s really hard to know how it’s going to play out, but I do think we’re going to find out and, in some ways, that’s not the worst thing in the world. Obviously, I wish it didn’t happen this way, but because everybody’s hand was forced, we’re trying to see what happens when a tax increase actually starts to impact the offering to the customer – which has never happened before. I know it’s happened abroad; when taxes are raised, it generally gets passed along to the customer through odds changes or other means. But it hasn’t happened in the US yet, so we’re going to find out.”

DraftKings Parodies and Public Perception

As we draw towards the conclusion of our Part Two interview, there is a real-life example I want to bring to Robins’ attention. We have discussed the product and how it impacts the player, while we have also covered the high marketing spend across US sports betting. But how does an increase in marketing translate in wider society? In February 2024, one Saturday Night Live (SNL) skit from Shane Gillis particularly caught my eye. It was named ‘Rock Bottom Kings’ and depicted a site where you could bet on your own friend’s misfortune, while they lost all their money displaying typical problem gambling tendencies. Objectively, it was a funny sketch.

The parody and name used were hardly subtle, though, and the clip reflected a broader trend not unique to the US. In markets where legalized sports betting proliferates, so too do gambling ads. And that isn’t to everyone’s liking. “I don’t remember that one specifically,” Robins remarks. “There’s been a bunch of them and my attitude towards those has always been: If they’re funny, I like them. If they’re not, I don’t. I thought the funniest one was what Conan O’Brien did. Then there was another SNL one that I can’t remember, I liked. I thought the John Oliver one was not funny at all.

“It just depends on whether it’s funny, and if it’s done with the intent to be comedic or the intent to take a shot at us. And I understand comedy involves taking shots. So if it’s taking a shot, but in a way that’s funny, I don’t mind. I can handle that. If it’s taking a shot at us and it’s not even funny, then it’s bad comedy, in my opinion. That’s how I look at it. I don’t get to watch much TV anymore because I have kids, work and other stuff that takes away time, but I used to watch SNL all the time and it has a lot of funny sketches.”

Separation from Association

Away from the specifics of comedic composers, Robins sees a link between negative pushback to sports betting marketing and the regulatory situation in Illinois. It’s a fair comparison to make and subsequently launches the DraftKings CEO into his most impassioned answer of our interview. An “interesting dynamic” impacts our industry, he notes, that doesn’t affect “big businesses” like Facebook or Uber. Indeed, the percentage of the US population that is an engaged sports betting customer is “relatively small” – but those who bet are “very passionate about it.” Naturally, for the 80-85% majority, constant wagering adverts can become tiresome.

According to Robins, however, that same principle applies to policymaking, with only a small percentage of those in legislature actually being bettors. Robins theorizes: “I know some places like Germany have said as much as 80% of the volume is migrated back to the illegal market, but I think most states get it. Over time, as generations turn over, gambling will no longer just have a negative perception. But, right now, especially if you’re outside Nevada, I think people associate betting with the illegal market. The view only considers illegal operators who are generating no tax revenue. They’re not doing things to verify age and it’s hard to get your money out. Then you have the stories of the local bookies in the neighborhood who break your kneecaps when you don’t pay.

“These are the things people associate historically with betting, not with a legal, regulated market. And so, if you’re not a customer already, you’re coming into it with that association in your mind. I think those are things that will change over time but, in the near term, we have to educate and try to be good stewards of the industry. We still have the challenge of the legal market, which muddies the waters for us so often. We hear stories from reporters, ‘Oh, I heard about this kid who lost his deposit.’ Well, where were they? ‘In Texas.’ We don’t operate in Texas – so it must have been an illegal operator. You don’t find those stories happening in the legal regulated market but, because of the lack of education, that can go over people’s heads. So we’re battling that association, but over time that’ll change and all the states that have legalized will see the illegal market dwindle to almost nothing.”

Predicting the Future

So where does DraftKings go from here? International expansion does not remain a priority for Robins, who has already discussed the benefits of staying US-focused and aligning costs to reward investors. New states will legalize, new innovations will boost the DraftKings product – same-game parlays helped immensely, while the SimpleBet acquisition boosted the company’s live and microbetting capabilities. But, even within the US’ already diverse gaming landscape, where you are as likely to see an online DFS operator as a land-based casino giant, there is still a whole new vertical for DraftKings to grow into.

The prediction markets space.

At the time of writing, FanDuel has created a joint venture with CME Group – a financial derivatives exchange operator with a market capitalization of $97bn – to enter the prediction/event contract space in Q4. In so doing, it will compete with young, hungry firms boasting their own billion-dollar-plus valuations, namely Kalshi, Polymarket and Robinhood – all led by relatively young execs. Underdog, too, has partnered with Crypto.com to enter the sports event contract space. While legal uncertainty lingers, the predictions arena is something DraftKings is very much expected to enter – with anticipation rising following FanDuel’s own announcement.

DraftKings has been monitoring federally regulated prediction markets and says it will work collaboratively with all stakeholders. Robins mused: “This whole federal prediction markets concept is fascinating. There’s never a dull moment. Whenever you think you’re in a zone where ‘okay, we can just keep our heads down, focus and the better execution will win,’ there’s some curveball that’s thrown our way. It always makes us think ‘okay, now what are we going to do?’ This is the latest one.”

Robins is right to highlight the change this industry constantly faces. Who knows what may come up if we convene for Part Three with the DraftKings CEO in another few years’ time? Until then, we ask for a quick summation of what the future holds for the operator. There is no hesitation as Robins utters the words “win with the customer.” Just as importantly, though, the shareholders are now getting in on those wins. And that makes DraftKings difficult to bet against.