Core Viewpoint - Prediction markets can serve as a significant tool to influence states towards the legalization of online sports betting, according to DraftKings CEO Jason Robins [1] Group 1 - The use of prediction markets is highlighted as a "powerful lever" for advocating the legalization of online sports betting [1]

Financial Data and Key Metrics Changes - The company reported a 38% year-on-year increase in group revenue, marking the strongest quarter of revenue growth since Q1 2022 [5] - Group-adjusted EBITDA increased by 32% year-on-year to $34 million, representing a 20% margin [5][24] - Operating cash flow for the quarter was $27 million, indicating seasonality in cash flow, which typically turns positive in the second half of the year [23] Business Line Data and Key Metrics Changes - Betting revenue grew by 28% year-on-year, primarily driven by growth with existing customers [6] - Media revenue surged nearly 90% year-on-year to $42 million, setting a new quarterly record [12] - The number of sportsbook customers utilizing the BetVision product increased from six to over 100 in one year, demonstrating significant growth [11] Market Data and Key Metrics Changes - The U.S. market is driving most of the growth, with a 19% revenue increase in the more mature European business year-to-date [21][22] - In-play betting represented 30% of total NFL handle, aligning with expectations, and is expected to continue driving revenue growth [9] Company Strategy and Development Direction - The company is focused on expanding its content coverage and increasing product adoption in the online sports betting industry [25] - The strategic acquisition of Sports Innovation Lab is enhancing the company's advertising capabilities and audience understanding [15][50] - The company is optimistic about the long-term potential of its media business, with a unique set of sports data and audience insights driving superior returns for advertising partners [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to capitalize on emerging opportunities in prediction markets, contingent on regulatory developments [19][44] - The company anticipates strong growth in both betting and media segments, raising revenue guidance from $645 million to $655 million for the full year [24] - Management highlighted the importance of integrity solutions and official data in the evolving market landscape [46] Other Important Information - The company plans to provide a detailed overview of its business and strategic outlook at the upcoming Investor Day on December 3rd [5][25] - The company is experiencing a timing mismatch between expense and revenue recognition due to new contracts, which is expected to resolve in Q4 [22][30] Q&A Session Summary Question: Can you quantify the impact of the Serie A and European leagues contracts? - Management noted a revenue timing mismatch but did not provide specific quantification [31] Question: What led to the media segment's strong performance? - The growth was attributed to agency partnerships and strong returns from advertising campaigns [40] Question: How does the company view the growth of the betting tech business? - Management expects strong growth above market rates, driven by product rollout and integration [38] Question: What is the company's stance on prediction markets? - Management sees potential opportunities in prediction markets but emphasizes the need for regulatory compliance [44] Question: How is the company addressing the integrity of its data? - The focus remains on providing official data and maintaining transparency in the market [46] Question: What is the outlook for free cash flow in Q4? - Management expects strong organic growth in free cash flow, particularly in the second half of the year [64] Question: How is the company approaching the NFL advertising inventory? - Management reported that NFL ad inventory has been sold out, indicating strong demand [82]

Financial Data and Key Metrics Changes - The company reported a 38% year-on-year increase in group revenue, marking the strongest quarter of revenue growth since Q1 2022 [5] - Group-Adjusted EBITDA increased by 32% year-on-year to $34 million, representing a 20% margin [5][24] - Betting revenue grew by 28% year-on-year, driven primarily by growth with existing customers [6][24] - Media revenue surged nearly 90% year-on-year to $42 million, setting a new quarterly record [12][24] Business Line Data and Key Metrics Changes - The media sector was the largest contributor to revenue growth, with a 90% increase year-on-year [12] - The betting segment saw significant growth due to exclusive rights secured for European leagues and Serie A, enhancing the content portfolio [7][8] - The number of sportsbook customers utilizing the BetVision product increased from six to over 100 within a year, demonstrating rapid expansion [11] Market Data and Key Metrics Changes - The U.S. market is driving most of the growth, with a 19% revenue increase in the more mature European business year-to-date [21][22] - In-play betting represented 30% of total NFL handle, aligning with expectations and indicating a growing trend in the U.S. market [9][56] Company Strategy and Development Direction - The company is focused on expanding its content coverage and product adoption in the online sports betting industry, aiming for durable revenue growth [24][25] - The strategic emphasis is on leveraging unique sports data, audience data, and advertising inventory to enhance return on ad spend for partners [17][19] - The company is observing developments in prediction markets, considering them as potential growth opportunities while ensuring compliance with regulations [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying trends across both betting and media, with expectations for continued strong growth [24][25] - The company raised its full-year revenue guidance from $645 million to $655 million, reflecting a 28% growth expectation [24] - Management highlighted the importance of official data and integrity solutions in the evolving market landscape [44][46] Other Important Information - The company plans to provide a detailed overview of its business and strategic outlook at the upcoming Investor Day on December 3rd [5][25] - The operating cash flow for the quarter was $27 million, indicating seasonality in cash flow patterns [23] Q&A Session Summary Question: Can you quantify the revenue timing mismatch related to Serie A and European leagues? - Management indicated that the rights market is evolving positively, with rights fees coming down, allowing for better technology deployment and partnerships [28][30] Question: What is the impact of the media segment's performance on EBITDA? - The media segment's strong growth was noted, but it flows through at a lower margin compared to the betting business, with expectations for improvement in future quarters [32][34] Question: How does the company view the growth of the betting tech business? - Management expects strong growth in the betting segment, with product rollouts and integration providing significant revenue opportunities [36][38] Question: What are the implications of prediction markets for the company? - Management sees potential opportunities in prediction markets but emphasizes the need to monitor regulatory developments closely [43][44] Question: How is the company addressing the integrity aspect of its business? - The focus remains on official data and transparency, which are increasingly vital as the market evolves [46] Question: What is the outlook for the media business growth? - Management raised growth expectations for the media business to nearly 30%, driven by strong agency relationships and advertising spend [24][40] Question: How is the company planning to create more NFL ad inventory? - Management confirmed that they have successfully sold out NFL ad inventory, allowing for future inventory creation [82]

Financial Data and Key Metrics Changes - The company reported a 38% year-on-year increase in group revenue, marking the strongest quarter of revenue growth since Q1 2022 [4] - Group-adjusted EBITDA increased by 32% year-on-year to $34 million, representing a 20% margin [4][21] - Operating cash flow for the quarter was $27 million, demonstrating seasonality with cash flow typically flipping positive in the second half of the year [21] Business Line Data and Key Metrics Changes - Betting revenue increased by 28% year-on-year, driven by growth with existing customers and the acquisition of exclusive rights to European leagues and Serie A [5][11] - Media revenue surged nearly 90% year-on-year to $42 million, marking a new quarterly record and the strongest year-on-year increase since Q1 2022 [11][22] Market Data and Key Metrics Changes - The U.S. market is driving most of the growth, with a 19% revenue increase year-to-date in the more mature European business [20] - In-play betting represented 30% of total NFL handle, aligning with expectations and indicating continued growth in this segment [7][9] Company Strategy and Development Direction - The company is focused on expanding its content coverage, increasing product adoption, and leveraging favorable commercial terms to enable durable revenue growth [22][23] - The acquisition of Sports Innovation Lab enhances the company's understanding of fan engagement and advertising effectiveness, positioning it well for future growth [13][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying trends across both betting and media, with expectations for nearly 30% growth in media for the full year [22] - The company is optimistic about the long-term potential of its advertising platform, driven by unique data and inventory capabilities [16][23] Other Important Information - The company is observing developments around prediction markets, which may provide new opportunities for expanding the addressable market [17][18] - Management emphasized the importance of compliance with regulatory requirements and the need for official data as the market evolves [32] Q&A Session Summary Question: Can you quantify the impact of the Serie A and European leagues on the quarter? - Management noted a timing mismatch between expense and revenue recognition due to contracts being finalized shortly after the quarter end, but did not provide specific quantification [24][26] Question: What drove the media segment's strong performance? - The growth was attributed to agencies and strong returns from advertising products, with the combination of these factors driving outsized growth [30][31] Question: How is the company positioned regarding prediction markets? - Management sees potential opportunities in prediction markets but is closely monitoring regulatory developments [32] Question: What is the outlook for the NFL's international expansion? - The NFL is experiencing success internationally, with increased interest and betting activity in new markets [46] Question: How does the company view the balance of growth versus profitability? - The company remains focused on achieving a 30% margin target while also emphasizing cash flow conversion and sustainable growth [54][56]

Group 1 - DraftKings is acquiring Railbird, which has received approval from the CFTC to operate as a designated contract market, allowing it to trade regulated event contracts in the U.S. [1] - DraftKings plans to launch a mobile app called "DraftKings Predictions" for trading regulated event contracts in various sectors, although the announcement did not specify sports as a focus area [1] - Flutter Entertainment's FanDuel is collaborating with CME to launch prediction and event contract businesses in the U.S., initially focusing on financial contracts [1] Group 2 - Analysts believe that acquiring customers in unregulated states and product/technology development are key drivers for online sports betting operators entering the prediction market [2] - The potential legal clarification of sports contracts could enable DraftKings and Flutter to quickly enter this market, and even without such clarity, prediction markets may push states to consider legalizing online sports betting for tax revenue [2] - The acquisition of Railbird is expected to boost DraftKings' market sentiment and expand its total addressable market (TAM) into states like California, Texas, and Florida, which currently do not have regulated online sports betting [2] Group 3 - The NHL has signed agreements with Polymarket and Kalshi to allow the use of its trademarks, similar to previous agreements with DraftKings, FanDuel, and BetMGM [3] - Following the news, DraftKings' stock rose by 3.15%, while Flutter Entertainment's stock fell by 1.27% [3]

Group 1: Core Insights - The investment bank Bernstein emphasizes the importance of "super fans" in driving growth and profitability in the entertainment industry, with effective engagement and monetization of these fans being a key differentiator [1] - The demand for live events and experiences has been fueled by "FOMO" (fear of missing out) and "YOLO" (you only live once) mindsets since the end of the pandemic, benefiting hotel groups and travel agencies [2] - Super fans are typically high-income individuals with low price sensitivity, maintaining stable consumption habits even during economic downturns, which may slow the growth of regular fans but significantly enhance profitability for leading companies [2] Group 2: Company Ratings and Targets - Live Nation Entertainment is highlighted as a top pick, with a target price of $185, the highest among analysts tracked by Bloomberg, due to its ticket sales, sponsorship revenue, and concert profit margins having room for growth [3] - Spotify is also rated positively, with a target price of $825, attributed to its underestimated pricing power and the anticipated launch of a super fan subscription service, which is expected to drive significant user adoption and boost gross margins [6] Group 3: Market Dynamics - Bernstein analysts believe that recent criticisms of Live Nation and Ticketmaster are temporary, and the likelihood of adverse rulings from the U.S. Department of Justice is low, with regulatory focus shifting from primary to secondary ticket markets [3] - The shift to "total price display" practices and the withdrawal of monopoly claims against artists indicate a changing regulatory landscape that may favor Live Nation [3]