Draftkings CEO on Super Bowl: 'We're expecting really big things'

Speakers

Jason Robins — CEO, DraftKings

Contessa Brewer — CNBC Contributor

Summary

The gambling industry expects a record $1.7 billion to be wagered on Super Bowl 60.
DraftKings (DKNG) stock has declined approximately 40% recently, driven by fears that "prediction markets" are cannibalizing traditional sports betting.
CEO Jason Robins presents a contrarian view on the recent CFTC news: while the market sold off on the delay of a ban on prediction markets, Robins views the move toward "clear guidelines" as a bullish signal that will allow regulated operators to enter and dominate that space.
High-tax jurisdictions are showing weakness; specifically, Illinois is seeing declining betting volumes after raising taxes.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
DKNG	LONG	Jason Robins CEO, DraftKings	DraftKings stock is down ~40% over the last six months. Investors sold off after the CFTC withdrew a proposed rule that would have banned sports prediction markets, fearing increased competition. The CEO argues the market has this backward. The CFTC moving toward "clear guidelines" rather than a ban is actually positive for DraftKings. As a fully legal, regulated entity, DraftKings cannot operate in "opaque" gray markets. Clear regulations allow them to deploy their resources, launch their own prediction products (which they have already started), and "win in this space." Robins explicitly states they have launched a predictions app and intend to compete directly. The public markets may continue to view prediction markets as a threat rather than an opportunity for some time; regulatory guidelines may take time to finalize.	0:12
PREDICTION MARKETS	WATCH	Jason Robins CEO, DraftKings	The CFTC (Commodity Futures Trading Commission) withdrew a proposed rule that would have banned sports contracts on prediction markets and is returning to the table to create guidelines. This signals a shift from potential prohibition to regulation. Regulatory clarity is the "green light" for the asset class to mature from a niche/gray market into a standardized industry where major corporate players can participate. The CFTC Chairman's comments were viewed by DraftKings as a "positive step" toward clarity. Specifics of the guidelines are unknown; future taxation on prediction markets could dampen their competitive advantage over traditional sportsbooks.	1:21
ILLINOIS GAMING MARKET	AVOID	Jason Robins CEO, DraftKings	Illinois recently passed a "fee per wager" (tax hike) on sports betting. High taxes are choking demand. When taxes rise, operators often have to offer worse odds or cut back on promotions to maintain margins, which drives customers away or reduces their activity. Since the tax change, the "handle" (total amount wagered) in Illinois has been declining every month. States may reverse course if tax revenue drops significantly, though this is politically difficult.	—