Joining me now to discuss is Chad Banan who's the senior gaming, lodging, and theaters analyst at Mcquaryy. Uh this was expected because we knew they had partnered with CME Group. But the announcement that they're launching in December and have said we're all in on sports betting where we're not already operating legal sports book is maybe somewhat of a surprise because there's been some reticence.State uh regulators have said in Nevada for instance, if you do this, we're not going to give you a gaming lice ...

Core Insights - Prize Picks is expanding into regulated US prediction markets by partnering with Poly Market, allowing users to wager on real-time sports and cultural moments [1][2] - The company aims to increase its customer base and enter new states, such as Washington, welcoming millions more into its platform [3][4] Company Overview - Prize Picks differentiates itself from traditional online sports betting by operating on a peer-to-peer model rather than against the house, focusing on supply and demand dynamics [4][5] - The company holds a Futures Commission Merchant (FCM) license from the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC), ensuring compliance with federal regulations [6][10] Industry Dynamics - There is an ongoing discussion about the integrity of prediction markets and sports betting, with potential collaborations between leagues and operators to limit betting in certain scenarios [11][12] - The industry is expected to see increased competition and innovation as new players enter the market, which will enhance customer value [15]

Core Viewpoint - DraftKings is launching a prediction market for sports outcomes, which could transform a competitive threat into a growth opportunity despite a recent cut in its full-year outlook due to unfavorable sports outcomes impacting revenue [2][3]. Company Developments - DraftKings reported an adjusted loss of 26 cents per share, matching estimates but widening from a loss of 17 cents a year ago. Sportsbook handle increased by 10% year-over-year to $11.4 billion, while sportsbook revenue fell by 9.3% to $596.1 million. Total revenue rose by 4.4% to $1.144 billion, driven by a 25% increase in iGaming revenue to $451.3 million [7]. - The company has lowered its full-year revenue outlook to a range of $5.9 billion to $6.1 billion from a previous range of $6.2 billion to $6.4 billion. Additionally, the outlook for full-year adjusted earnings before interest, taxes, depreciation, and amortization has been cut to a range of $450 million to $550 million from $800 million to $900 million [8]. Market Position and Strategy - DraftKings is set to launch its prediction market, pending license approvals, targeting nearly half of the U.S. population in states without access to online sports betting. This market allows traders to buy and sell contracts based on specific sports outcomes, potentially increasing engagement and revenue [4]. - The company has secured exclusive marketing agreements with ESPN and NBCUniversal, which are expected to enhance its market presence and drive growth [3]. Competitive Landscape - Robinhood has entered the sports prediction market, joining competitors like Kalshi and Polymarket, which recently received a $2 billion investment from Intercontinental Exchange [5]. - DraftKings has been named as Disney's official sportsbook and odds provider, effective December 1, following the early termination of the ESPN Bet deal with Penn Entertainment [9]. Stock Performance - Following the announcement of its new sportsbook partnership with ESPN, DraftKings' stock initially fell over 6% to a two-year low but later rebounded to a 1.7% gain. Canaccord and BTIG have adjusted their price targets for DKNG stock to $54 and $42, respectively, while maintaining buy ratings [10][11].

Financial Data and Key Metrics Changes - In Q3 2025, the company generated $1,144 million in revenue, representing a 4% year-over-year growth [16] - Adjusted EBITDA for Q3 was -$127 million, which was below expectations due to customer-friendly sports outcomes impacting revenue by over $300 million [16][10] - The fiscal year 2025 revenue guidance was revised to $5.9 billion-$6.1 billion, implying a growth of 24%-28% compared to fiscal year 2024 [18] Business Line Data and Key Metrics Changes - Sportsbook handle increased 10% year-over-year to $11.4 billion, with NFL handle growing 13% and NBA handle growing 19% season-to-date [17][7] - iGaming net revenue growth accelerated to 25% year-over-year, marking the fastest growth since Q1 2024 [8] - Customer retention rates for NFL Week One customers improved by over 300 basis points compared to the same weeks a year ago [7] Market Data and Key Metrics Changes - Total Sportsbook handle increased 17% year-over-year in October [8] - Parlay handle mix surged with year-over-year gains of 800 basis points for NFL and 1,000 basis points for NBA season-to-date [8] - Nearly half of the U.S. population remains without access to legal online sports betting, presenting a significant growth opportunity [12] Company Strategy and Development Direction - The company is launching DraftKings Predictions, which is viewed as a significant incremental opportunity to expand the total addressable market [11] - Exclusive marketing agreements with ESPN and NBCUniversal are expected to enhance brand affinity and broaden reach [8] - The company plans to focus on states where it does not currently offer Sportsbooks, targeting areas with the most financial opportunity [13] Management's Comments on Operating Environment and Future Outlook - Management expressed strong confidence in the long-term financial potential of the company, despite revising fiscal year 2025 guidance [5] - The impact of sports outcomes on financial results is acknowledged, with management emphasizing that these variances typically normalize over time [10] - The company is optimistic about the future growth of predictions and its potential to motivate more states to legalize online sports betting [12] Other Important Information - The board has authorized an increase in the share repurchase program from $1 billion to $2 billion, with plans to be active in share repurchases [14] - The company is investing in AI to improve cost structure and revenue trajectory, with some investments expected to pay back in 2026 [70] Q&A Session Summary Question: OSB hold percentage and confidence in recovery - Management acknowledged the frustration with recent customer-friendly outcomes but emphasized that over time, results normalize [21][22] Question: Addition of Greg Wendt to the board - Management expressed excitement about Greg Wendt's expertise in investing and capital markets, anticipating his contributions to strategy [25][26] Question: Volatility of hold due to Parlay - Management indicated that while increased parlay activity may introduce volatility, the focus remains on maximizing long-term value while managing risk [29][30] Question: Profitability of prediction markets - Management plans to adopt a conservative approach to investment in prediction markets, focusing on data-driven decisions as more information becomes available [32][33] Question: Conversations with regulators regarding prediction markets - Management highlighted the importance of relationships with regulators and the strategic focus on states without existing online sports betting [38][39] Question: Significance of the ESPN deal - Management emphasized the long-standing relationship with ESPN and the potential for significant growth through integration and marketing collaboration [51][52] Question: Impact of promotional spending on guidance - Management noted that most of the guidance adjustment was due to outcomes, with some additional spending anticipated for predictions and product development [62][63] Question: Investment focus for next year - Management indicated that core business investments would remain stable, with a focus on new states and AI technology [68][70] Question: Spanish-language app opportunity - Management expressed excitement about the upcoming Spanish-language app, particularly in light of the World Cup and the growing Hispanic demographic [92][95] Question: Attribution of parlay mix growth - Management attributed the growth in parlay mix to product innovation and effective promotional strategies, indicating a strong focus on this area moving forward [98][100]

Financial Data and Key Metrics Changes - In Q3 2025, the company generated $1,144 million in revenue, representing a 4% year-over-year growth [16] - Adjusted EBITDA for Q3 was negative $127 million, impacted by customer-friendly sports outcomes that affected revenue by over $300 million [16][10] - The company revised its fiscal year 2025 revenue guidance to $5.9 billion-$6.1 billion and adjusted EBITDA guidance to $450 million-$550 million, reflecting a growth of 24%-28% compared to fiscal year 2024 [18] Business Line Data and Key Metrics Changes - Sportsbook handle increased by 10% year-over-year to $11.4 billion, with strong engagement driven by promotions [17] - iGaming net revenue growth accelerated to 25% year-over-year, marking the fastest growth since Q1 2024 [8] - The parlay handle mix surged, with year-over-year gains of 800 basis points for NFL and 1,000 basis points for NBA season to date [8] Market Data and Key Metrics Changes - NFL handle grew 13% season to date, while NBA handle increased by 19% season to date, indicating an acceleration in growth compared to previous quarters [7] - Total sportsbook handle increased by 17% year-over-year in October [8] Company Strategy and Development Direction - The company is optimistic about future growth, driven by exclusive marketing agreements with ESPN and NBCUniversal, and the upcoming launch of DraftKings Predictions [5][12] - The focus will be on states without existing online sports betting, aiming to capture a new customer base and revenue stream [12][41] - The share repurchase program has been increased from $1 billion to $2 billion, indicating confidence in future cash flow [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of sports outcomes on financial results but emphasized that over time, these variances typically normalize [10][24] - The company remains confident in its long-term financial potential, citing strong customer retention rates and product enhancements driving engagement [5][7] - Management expressed excitement about the potential of DraftKings Predictions to expand the total addressable market [12] Other Important Information - The company is developing a Spanish-language app to cater to a growing demographic ahead of the 2026 World Cup [9][93] - The company has made significant progress in growing its sportsbook hold percentage and net revenue margin, primarily due to an increasing parlay handle mix [9] Q&A Session Summary Question: OSB hold percentage and confidence in future swings - Management acknowledged the frustration with recent outcomes but noted that over time, results tend to normalize, and the business model remains strong [21][24] Question: Value addition of new board member Greg Went - Management expressed excitement about Greg Went's expertise in gaming investment and his potential contributions to the company's strategy [25] Question: Volatility of hold due to parlay increases - Management indicated that while parlay betting can increase volatility, the focus remains on maximizing long-term value while managing risk appropriately [29][30] Question: Profitability of prediction markets - Management plans to adopt a conservative approach to investment in prediction markets, focusing on data-driven decisions and shorter payback periods [32][33] Question: Conversations with regulators regarding prediction markets - Management emphasized the importance of relationships with regulators and the strategic focus on states without existing online sports betting [38][41] Question: Significance of ESPN deal - Management highlighted the long-standing relationship with ESPN and the potential for significant customer engagement through integrated marketing efforts [51][52] Question: Breakdown of the $300 million impact on guidance - Management indicated that most of the impact was due to sports outcomes, with some additional considerations for prediction market spending [62] Question: Investment strategy for next year - Management stated that there would be minimal incremental investment in core business areas, with a focus on new states and AI technology [70] Question: Customer acquisition through Spanish-language app - Management expressed optimism about the potential for the Spanish-language app to capture a significant share of the growing Hispanic demographic [93][95] Question: Attribution of growth in parlay mix - Management attributed the growth in parlay mix to product innovation and effective promotional strategies [98][100]

Financial Data and Key Metrics Changes - In Q3 2025, DraftKings generated $1,144 million in revenue, representing a 4% year-over-year growth [14] - The company reported a negative adjusted EBITDA of $127 million for the quarter, which was below expectations due to customer-friendly sports outcomes impacting revenue by over $300 million [14][9] - For fiscal year 2025, revenue guidance was revised to $5.9 billion-$6.1 billion, down from the previous guidance of $6.2 billion-$6.4 billion, reflecting a growth of 24%-28% compared to fiscal year 2024 [17] Business Line Data and Key Metrics Changes - Sportsbook handle increased by 10% year-over-year to $11.4 billion, with a significant acceleration in October, where total sportsbook handle increased 17% year-over-year [16][6] - iGaming net revenue growth accelerated to 25% year-over-year in Q3 2025, marking the fastest growth since Q1 2024 [6] - Customer retention rates for NFL Week One customers improved by over 300 basis points compared to the same weeks a year ago [5] Market Data and Key Metrics Changes - The parlay handle mix surged with year-over-year gains of 800 basis points for NFL season to date and 1,000 basis points for NBA season to date [6] - NFL handle grew by 13% season to date, while NBA handle grew by 19% season to date, indicating an acceleration in growth compared to previous quarters [5] Company Strategy and Development Direction - The company is optimistic about its future, citing new exclusive marketing agreements with ESPN and NBCUniversal as key advantages [4] - DraftKings is set to launch DraftKings Predictions, which is viewed as a significant incremental opportunity to expand its total addressable market [10] - The company plans to focus on states where it does not currently offer sportsbooks, targeting areas with the most financial opportunity [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of customer-friendly sports outcomes on financial results but emphasized that these variances typically normalize over time [21][22] - The company remains confident in its long-term financial potential, with expectations of generating $450-$550 million in adjusted EBITDA for fiscal year 2025 [17] - Management highlighted the importance of maintaining strong customer engagement and product enhancements to drive future growth [5] Other Important Information - DraftKings has repurchased 9.3 million shares since the inception of its share repurchase program, with the board authorizing an increase in the program from $1 billion to $2 billion [12] - The company is developing innovative slot and jackpot content in iGaming and has brought in a new leader to solidify its position in this area [8] Q&A Session Summary Question: Concerns about OSB hold percentage and customer-friendly outcomes - Management acknowledged the frustration with recent outcomes but noted that such variances are part of the business and typically normalize over time [21][22] Question: Value of new board member Greg Went - Management expressed excitement about Greg Went's addition to the board, highlighting his expertise in investing and capital markets [24] Question: Balancing structural hold and volatility with increasing parlay offerings - Management emphasized the importance of maximizing long-term value while managing risk, acknowledging that volatility can occur during concentrated events [26][29] Question: Profitability of prediction markets - Management stated that they will take a conservative approach to investment in prediction markets, focusing on data-driven decisions and shorter payback periods [30][32] Question: Conversations with regulators regarding prediction markets - Management confirmed ongoing discussions with regulators to ensure compliance and to understand the market landscape [36][38] Question: Significance of the ESPN deal - Management highlighted the strategic importance of the ESPN partnership, which will enhance customer engagement and marketing efforts [45][46] Question: Impact of promotional spending on guidance - Management indicated that most of the guidance adjustment was due to sports outcomes, with some consideration for promotional spending related to new product launches [57] Question: Investment focus for the upcoming year - Management indicated that there would be minimal incremental investment in core business areas, with a focus on new states and AI technology [63][64] Question: Spanish-language app opportunity - Management expressed excitement about the upcoming Spanish-language app, particularly in light of the World Cup and the growing Hispanic demographic in the U.S. [86][88] Question: Attribution of growth in parlay mix - Management attributed the growth in parlay mix to a combination of product innovation and effective promotional strategies [90]

Group 1: Tesla and Elon Musk - Tesla shareholders approved Elon Musk's unprecedented $1 trillion pay package, which is contingent on meeting specific business targets, making him a potential trillionaire [7][10] - The board is hesitant to invest Tesla's funds into Musk's xAI artificial intelligence start-up, despite shareholder support for the proposal [3][6] - Musk expressed optimism that AI-trained Optimus robots will reduce labor costs and increase production, with plans for Cybercab production to begin in April 2026 [8] Group 2: Market Sentiment and AI Investment - The market mood towards AI investments appears to be darkening, with investors wary of large expenditures in the sector amid economic uncertainty [4][5] - Technology stocks have faced significant selling pressure, leading to a flight to safe-haven assets, which complicates justifying long-term investments in AI [5][6] Group 3: DraftKings and Market Competition - DraftKings reported third-quarter sales of $1.14 billion, a 4.4% increase, but fell short of Wall Street expectations, leading to a wider-than-expected loss [15] - The company plans to enter prediction markets, which will allow it to compete with other platforms like Kalshi and Polymarket, expanding its market reach [15][16] Group 4: Schwab's Acquisition of Forge Global - Charles Schwab is acquiring Forge Global, a private markets exchange, for approximately $660 million, aiming to make investing in private companies more accessible [16][21] - The acquisition is expected to enhance Forge's marketplace by connecting it with Schwab's extensive client base, potentially increasing liquidity for private companies [17][21]

Core Insights - The current momentum in the market is expected to persist in the near term, presenting an opportunity for participation and success [1] - The offering in states like California and Texas is less robust compared to full online sportsbooks, but it can still generate significant interest [2] - The financial opportunities align with regions that have a clearer regulatory landscape, indicating a strategic focus on these areas [3] Market Dynamics - The comparison between exchange-based betting and traditional sports betting shows that exchange products hold a small market share in regions with both offerings [4] - In markets where both full-fledged sportsbooks and prediction markets exist, there is minimal volume migration from sportsbooks, suggesting that the prediction market may serve as an incremental addition rather than a replacement [5] - Current evidence indicates that the introduction of new products has not negatively impacted existing sportsbook numbers, which remain strong [6]

Financial Data and Key Metrics Changes - The retail segment generated revenues of $1.4 billion with adjusted EBITDA of $465.8 million, resulting in segment-adjusted EBITDA margins of 32.8% [13] - The interactive segment reported revenues of $297.7 million, including a tax gross-up of $139.5 million, and an adjusted EBITDA loss of $76.6 million [14] - Total liquidity at the end of Q3 was $1.1 billion, including $660 million in cash and cash equivalents [16] Business Line Data and Key Metrics Changes - The North America iCasino business achieved its highest quarterly gaming revenue to date, with a nearly 40% year-over-year improvement driven by record cross-sell from OSB of 62% [6][7] - iCasino monthly active users (MAUs) increased by 79% during Q3, with new all-time records for MAUs, gross gaming revenue (GGR), and net gaming revenue (NGR) set in October [7] - The transition to theScore Bet is expected to enhance digital business efficiency and profitability, with a focus on high-margin markets [5][8] Market Data and Key Metrics Changes - The company noted stable demand across gaming and non-gaming amenities, particularly in regions not impacted by new supply and increased competitor promotional activity [9] - The new Hollywood Casino in Joliet has driven impressive volumes and database growth, with a 42% increase in the active database since opening [10] Company Strategy and Development Direction - The company is realigning its interactive focus to prioritize digital assets in Canada and the Hollywood iCasino product, leveraging cross-sell opportunities across its ecosystem [4][5] - The early termination of the ESPN agreement will cease cash payments and marketing obligations, allowing for a more flexible marketing strategy focused on high-return markets [12][23] - The company plans to continue investing in growth capital while managing share repurchases as a key component of its capital allocation strategy [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate increased competition and promotional activity, emphasizing the importance of maintaining a strong value proposition [36] - The company is focused on achieving profitability in its digital segment by 2026, with a clear plan for retention and marketing strategies post-rebranding [8][43] - Management highlighted the importance of controlling the business's cost structure and marketing budget to enhance profitability moving forward [8][23] Other Important Information - The company repurchased $154.1 million of shares at an average price of $19.34 per share in Q3, with a total of $354 million repurchased as of November 5 [17] - The total CapEx for 2025 is now projected at $685 million, reflecting a shift of some project costs into the next year [20] Q&A Session Summary Question: Impact of ESPN exit on near-term and long-term profitability - Management discussed the strategic investments made in digital business and the importance of cross-selling to the retail segment, emphasizing the younger customer demographic acquired through digital channels [27][30] Question: Increased competition and promotional activity - Management acknowledged the impact of new competition and promotional activity on operations, noting that while there may be temporary increases in costs, the company remains committed to delivering best-in-market offerings [34][36] Question: Customer retention strategies post-rebranding - Management expressed confidence in retaining customers during the transition to theScore Bet, highlighting improvements in product quality and user experience [70][71] Question: Future growth opportunities in Canada - Management indicated that while there are limited retail property options in Canada, they remain open to opportunistic acquisitions that align with their omnichannel strategy [61] Question: Leverage targets for the business - Management stated that the optimal leverage level is below five times, with a focus on balancing share repurchases, growth investments, and debt reduction [62]

Financial Data and Key Metrics Changes - The Retail segment generated revenues of $1.4 billion with adjusted EBITDAR of $465.8 million, resulting in segment adjusted EBITDAR margins of 32.8% [16] - The Interactive segment reported revenues of $297.7 million, including a tax gross-up of $139.5 million, and an adjusted EBITDA loss of $76.6 million [18] - Total liquidity at the end of 2025 was $1.1 billion, including $660 million in cash and cash equivalents [20] Business Line Data and Key Metrics Changes - The North America iCasino business achieved its highest quarterly gaming revenue to date, improving nearly 40% year over year, driven by record cross-sell from OSB of 62% [8] - The introduction of a standalone app and improved cross-sell from online sports betting led to a 79% increase in iCasino monthly active users (MAUs) during the third quarter [9] - The company expects fourth quarter 2025 revenues for the Retail segment to range from $1.41 billion to $1.43 billion, with adjusted EBITDAR ranging from $455 million to $475 million [18] Market Data and Key Metrics Changes - The company noted stable demand across gaming and non-gaming amenities, particularly in markets not impacted by new supply and increased competitor promotional activity [11] - The new Hollywood Casino in Joliet has seen a 42% increase in its active database since opening, with over 50% of that growth coming from previously inactive customers [12] Company Strategy and Development Direction - The company is shifting its interactive focus to prioritize digital assets in Canada and Hollywood iCasino products, emphasizing cross-sell opportunities across its ecosystem [5] - The transition to the Score Bet brand is expected to optimize the digital business and operate more efficiently, including replacing fixed media spends with performance-based marketing [7] - The company plans to continue investing in growth capital while also focusing on share repurchases and deleveraging [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to compete effectively in the evolving industry landscape, highlighting the importance of an omnichannel strategy [28] - The company aims to achieve breakeven or better in its interactive segment by 2026, with a focus on profitability and operational efficiency [10][96] - Management acknowledged the challenges posed by increased competition and promotional activity but remains optimistic about the company's ability to maintain its market position [41][44] Other Important Information - The company announced an early termination of its exclusive online sports betting marketing agreement with ESPN, ceasing cash payments at the end of 2025 [15] - A total of $38.1 million will be paid to ESPN for marketing services incurred through December 1, with an additional $5 million for traditional media support [15] - The company has repurchased $354 million of shares as of November 5, with a new three-year $750 million share repurchase authorization commencing on January 1, 2026 [21] Q&A Session Summary Question: Can you talk about the near-term and long-term profitability for interactive following the ESPN exit? - Management highlighted that the digital investments aimed to attract younger customers and cross-sell to retail businesses, with a focus on profitability moving forward [32][34][38] Question: How has increased competition and promotional activity impacted operations? - Management noted that while new competition has led to increased marketing costs, properties not impacted by new supply are performing well [41][44] Question: Can you clarify the expected marketing costs post-ESPN? - Management indicated that marketing costs will be significantly lower than those previously paid to ESPN, allowing for more targeted spending in high-return markets [48][49] Question: What are the strategies for customer retention during the rebranding to Score Bet? - Management expressed confidence in retaining customers due to improved user experience and a comprehensive marketing plan, emphasizing that the app experience will remain unchanged [84][90] Question: What is the company's leverage target moving forward? - Management stated that the optimal lease-adjusted leverage level is below five times, with a focus on deleveraging while remaining opportunistic in capital allocation [76][78]