{"id":2394,"date":"2021-12-07T02:51:50","date_gmt":"2021-12-07T10:51:50","guid":{"rendered":"https:\/\/wagers.com\/staging\/4285\/?p=2394"},"modified":"2021-12-07T11:54:11","modified_gmt":"2021-12-07T19:54:11","slug":"commentary-comments-from-draftkings-robins-shows-pros-and-cons-of-profitable-players","status":"publish","type":"post","link":"https:\/\/wagers.com\/staging\/4285\/news\/commentary-comments-from-draftkings-robins-shows-pros-and-cons-of-profitable-players\/","title":{"rendered":"Commentary: Comments from DraftKings’ Robins shows pros and cons of profitable players"},"content":{"rendered":"

Jason Robins caused quite a stir last week when he took the opportunity of a fireside chat with analysts to suggest that DraftKings wasn\u2019t interested in players who were \u201cdoing this for a profit.\u201d<\/span>\u00a0<\/span><\/p>\n

Suffice to say, this didn\u2019t go down well with #GamblingTwitter as poster after poster took to the social media airwaves to condemn Robins’ plain speaking.<\/span>\u00a0<\/span><\/p>\n

But as <\/span>one of his defenders put it<\/span><\/a>, \u201cI, for one, am shocked that a business is operating like a business.”<\/span>\u00a0<\/span><\/p>\n

The sales pitch<\/b><\/p>\n

First, it should be understood which audience Robins was speaking to.<\/span>\u00a0<\/span><\/p>\n

Companies don\u2019t use investment bank fireside chats to open up a dialogue with the players or, indeed, the media and particularly its social wing.<\/span>\u00a0<\/span><\/p>\n

This was a sales pitch to investors.<\/span>\u00a0<\/span><\/p>\n

You might say it\u2019s clumsy. But Robins was attempting to convince those either already invested in DraftKings, or importantly those who might want to invest in the future, that his company is serious about making a profit.<\/span>\u00a0<\/span><\/p>\n

This is not controversial stuff. All companies make profits from their customers. The sportsbook industry is no different.<\/span>\u00a0<\/span><\/p>\n

It doesn\u2019t work if it\u2019s the other way around.<\/span>\u00a0<\/span><\/p>\n

Raking it in<\/b><\/p>\n

During another digital fireside chat, DraftKings CFO Jason Park spoke to Jefferies analyst David Katz about his company’s<\/span>\u00a0acquisition of Golden Nugget Online Gaming.<\/span>\u00a0<\/span><\/p>\n

\u201cWe\u2019ve scratched that itch,\u201d Park told Katz. \u201cThen we\u2019ll turn our attention to extracting the synergies from that deal.\u201d<\/span>\u00a0<\/span><\/p>\n

To translate, extracting synergies is about extracting profit. From players.<\/span>\u00a0<\/span><\/p>\n

No one on #GamblingTwitter blew up about the idea that online casino customers might be profitable for a company that services them with their gambling games of choice. <\/span>\u00a0<\/span><\/p>\n

To reiterate, this is not controversial stuff.<\/span>\u00a0<\/span><\/p>\n

Making a simple betting proposition<\/b><\/p>\n

To reiterate this position, Chris Bevilacqua, chairman at the provider Simplebet, which is working with DraftKings on what they call micro-betting products or discrete in-gaming bets.<\/span>\u00a0<\/span><\/p>\n

\u201cOur product turns a live three-hour event into a slot machine,\u201d Bevilacqua told the audience at the SBC Summit North America held at the Meadowlands in New Jersey.<\/span>\u00a0<\/span><\/p>\n

The sharps – as everyone likes to term those who think they are adept at betting \u2013 might not like the idea of explicitly linking a betting product to slot machines.\u00a0<\/span>It exposes the underlying logic of all betting. “Sophisticates” might like to think they can beat the system by smarter play.<\/span>\u00a0<\/span><\/p>\n

And sometimes they will. Sometimes they will take money off the bookies.<\/span><\/p>\n

But oftentimes they won\u2019t. Indeed, most times they won\u2019t. Even the smartest bettor, employing the best system, will lose occasionally.\u00a0<\/span><\/p>\n

Or a lot if they are looking to get their kicks from micro-bets.<\/span>\u00a0<\/span><\/p>\n

The general point is this: the vast majority of players lose money over time.\u00a0<\/span>Otherwise, the gambling operators wouldn\u2019t exist. <\/span>Does this need to be said out loud? <\/span><\/p>\n

Apparently so.<\/span><\/p>\n

Because what Robins is guilty of \u2013 if guilt is the right word \u2013 is voicing a simple truth. If DraftKings existed to cater solely for players who made a profit, then it wouldn\u2019t be very much of a gambling company. In fact, it would go bust.<\/span>\u00a0<\/span><\/p>\n

The contradictions of the meme stock crowd<\/b><\/p>\n

In a separate social media furor, <\/span>Robins hit back at renowned investor Jim Chanos<\/span><\/a> over <\/span>comments Chanos made<\/span><\/a> about DraftKings\u2019 current trading multiple.<\/span><\/p>\n

The comments were then picked up by a thread on the notorious r\/wallstreetbets Reddit page where traders in DraftKings stock railed against a \u2018boomer\u2019 for attacking DraftKings for its lack of profitability. <\/span>It is no great leap to assume that some of those responsible for the attacks on Chanos \u2013 and they were attacks \u2013 not only are <\/span>invested<\/span><\/i> in DraftKings but also <\/span>bet<\/span><\/i> with<\/span><\/i> DraftKings.<\/span>\u00a0<\/span><\/p>\n

Similarly, it isn\u2019t a stretch to assume that some of these poster\/investors might well hold the contradictory thought in their heads that they win with DraftKings and everyone else loses.<\/span>\u00a0<\/span><\/p>\n

It means they can both bet with the firm and invest in it without their brains short-circuiting.<\/span>\u00a0<\/span><\/p>\n

The difference between winning and being profitable<\/b><\/p>\n

But it is a lie. I would wager \u2013 and hey, I never lose \u2013 that over time these r\/wallstreetbets warriors do lose with DraftKings. Maybe they even lose a lot.<\/span>\u00a0<\/span><\/p>\n

They might believe they are winners \u2013 and occasionally they might even be winners \u2013 but as one wiseacre on Twitter pointed out, there is a big difference between hoping to win a bet and hoping to be profitable as a bettor.\u00a0<\/span>Those that achieve the latter are a very small minority. And nobody wants their action. <\/span>Even those that say they want sharp action know full well the difference between those two propositions.<\/span>\u00a0<\/span><\/p>\n

Yes, they will actively advertise themselves to players who think they can make a profit. But they know they are advertising themselves to people who in reality, make a loss.<\/span>\u00a0<\/span><\/p>\n

So Robins\u2019 mistake? Being truthful about this aspect of the business. #GamblingTwitter\u2019s mistake? Not giving him credit for knowing his business better than they do.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Jason Robins caused quite a stir last week when he took the opportunity of a fireside chat with analysts to suggest that DraftKings wasn\u2019t interested in players who were \u201cdoing this for a profit.\u201d\u00a0 Suffice to say, this didn\u2019t go down well with #GamblingTwitter as poster after poster took to the social media airwaves to […]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[324],"tags":[590,5],"class_list":["post-2394","post","type-post","status-publish","format-standard","hentry","category-news","tag-draftkings","tag-sports-gambling"],"_links":{"self":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/2394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/comments?post=2394"}],"version-history":[{"count":4,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/2394\/revisions"}],"predecessor-version":[{"id":2401,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/2394\/revisions\/2401"}],"wp:attachment":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/media?parent=2394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/categories?post=2394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/tags?post=2394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}