Q1 2020 Earnings Call

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Ladies and gentlemen, todays call frenzy scheduled to begin shortly please continue to stand by and thank you for your patience again today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

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Good day, ladies and gentlemen, thank you for standing by welcome to the Draftkings first quarter Twentytwenty earnings Conference call. At this time, all participants are not listen only.

A question and answer session will follow the formal presentation.

Please note that this conference call is being recorded today mid teen Twentytwenty at the time I liked it turns builder to Draftkings, Chief legal Officer Stanton Dodge.

Good morning, everyone and thanks for joining US state would you make during this call that are not statements of historical facts constitute forward looking statements that are subject to risks uncertainties and other factors that could cause <unk> actual results could differ materially from historical results indoor from our forecast.

We assume no responsibility for up getting forward looking statements.

More information please refer to the risks uncertainties and other factors discussed in her as she sees language.

During the call management wants to discuss certain non-GAAP and non I FRS measures, which we believe could be useful in evaluating draftkings and SP tax operating performance.

These measures should not be considered in isolation.

There's an awkward your substitute for Draftkings financial results.

Prepared in accordance with gap, whereas be takes for neutral results prepared in accordance with IRS.

Reconciliation of these measures to the most directly comparable GAAP for Ivor Ruste measures is available at our current report on form 8-K filed today with the FCC into earnings presentation available on our web sites and investors Dr. offerings Dot com.

On the call today, we have Jason Robinson, Chief Executive Officer, and Jason Park, Chief Financial Officer at Droppings. It will provide opening remarks interview financials and then we will put the called two questions.

I'll now turn called over to dropping CEO, Jason Robinson. Thank you Stan and good morning, everyone. Welcome to our first earnings call. It a publicly traded company before we start I'd like to thank all the essential workers from health care professionals to grocery store employees who've been on the frontline fighting a global Panda I thought there with everyone has been impacted by covert 19.

I'd also like express my appreciation to our shareholders for their support your thankful for the belief that our investors have demonstrated in tracking either participation our business combination and we also greatly value and welcome those will become new drafting shareholders.

Exactly Park transaction is a testament to the conviction in confidence our owners, having our ability to continue to build the only you ft pure play sports betting and I gaming company.

The jacking vision is unchanged.

Our goal is to build the bath, most trusted customer centric destination for skin in the game fan offering the most entertaining real money gaming products that will forever transform the way people experience.

I'd like to cover three main topics.

First I will provide a brief summary of the business the large and growing market opportunity our strong competitive positioning in our ability to generate differentiated economic.

Second I'll review, how you're managing through the current crisis to best position our business, it's sporting events for them and I will also provide an update on where things stand in the legislative front.

Third I'll outline our major priority going forward.

With that let me start with a summary of our business.

Draftkings is uniquely positioned at the intersection of digital sports Entertainment and gaming in a rapidly growing industry.

Just opportunity represents an estimated addressable market of over $30 billion in the U.S. alone when considering a combination of online sports betting fantasy sports I game.

They may also be less developed fantasy embedding markets it could grow significantly in the coming years such E sports.

We believe the combination that may large currently underserved market along with strong momentum on the legislative provides the potential to create an environment of continuous category expansion for many years to come.

We see ourselves, but from your branded digital sports Entertainment. We're currently one of the leading U.S. digital Sportsbook and had the number one rated daily fantasy sports and Sportsbook apps in the country.

Through the acquisition of <unk> eat that we've created the only vertically integrated sports betting company in the U.S., enabling us to be the product innovation leader for American sports with a clear focus on the American sports fan.

Finally, we have differentiated economics in online game due to our strong CAC and LTV metric driven by our large and growing fantasy sports database, a strong and well known brand significant expertise and infrastructure around marketing and robust cross sell metrics powered by years of investment data science and handle it.

Additionally, we have a clear state entry playbook to drive long term profitability.

Turning to current events I want to provide an overview of how we're responding to covert Nike.

Certainly the current environment, a major sports the major sporting event. This created short term revenue headwinds for the business.

However, we are now in a strong position with nearly half a billion dollars a cash on our balance sheet.

Additionally, our long term growth expectations remain unchanged in under certain scenarios me even accelerate.

Well no one can predict exactly how cobot 19 will affect the world and for how long we are confident in sports or time, Backings, we'll be ready.

As we've taken steps to navigate the short term impact to the crisis. We've also been planning for what the post cobot 19 world might look like ensuring that the actions. We're taking today are putting a strong as possible fish.

Our number one priority of the company is our employee health and safety and our organization continues to work productively in its work from home environment.

Our teams are making great progress on our key priority such as launching new state continuously upgrading or data automation and marketing technology capability and building great products for customers.

Product and technology teams have also created new content that is keeping our customers engage during that period.

I'd like to think all of our tremendously talented employees, who have stepped up and adapted to new working conditions without missing a beat it been truly remarkable to witness.

I'm not no I'm very proud of content that we have developed over the last two month. For example, we've built a product that allows tracking customer to engage in east fourth events, such as stimulated NASCAR counterstrike in rocket.

We develop content for lesser known competitive sports such a table pen.

We launched a plethora of pop culture free to play pools contest that covered everything from the Democratic the date to TV shows like survivor, the last dancing Topshop.

We also want stimulated managing and most recently, we partner with MLB on their new MLB Dream bracket game.

In parallel we've continued to deliver on our state expansion Roadmaps successfully watching but I gaming in Pennsylvania and sports betting Colorado in early May.

The engagement numbers that we're seeing across all these products are great validation that our customers are loving the content and it also shows their passion for our products and loyalty to our brand.

As we continue to monitor developments in sports even team we are proactively planning for the variations of what the sports calendar could look like the rest of the.

But the expectation that the sport kind of overlap like never before our focus is on ensuring that we're prepared for the potential increase traffic in activity.

There's still a lot of unknowns about how cobot 19 will ultimately impact major sporting events, we are confident in our ability to perform as we prepare for what we hope will be a busy global sports calendar in the second half the year.

Currently we do not anticipate any impact to our flight 2021 or long term plans. They result in cobot, 19th assuming the sporting events calendar everything to normal state by 2021.

There appears to be momentum with sports betting and I gaming legislation. The U.S., we're continuing to work with regulators to get our product lines in states, where we do not currently operate.

In Q1, we launched sports betting in Iowa, more recently, we launched Igaming, Pennsylvania and online sports in Colorado.

Additionally, an online sports betting don't became law in Virginia on April 22nd other state that passed legislation over the past year. So in in a process of working towards launching operators.

These states include Michigan, which pathway sports betting and I gaming law in December 2019, and Tennessee in Illinois, which legalized online sports betting about a year ago.

At this time approximately 14 states are actively considering sports betting legislation. We're hopeful that we will continue to see the momentum as many states are expected to come from budget deficit.

Finally, before I turn it over to our CFO, Jason Park to detail, our Q1 performance and results I wanted to provide an overview of our priorities for the business.

As always we are focused on entering new states. The earliest opportunity. In addition to the recent news in Pennsylvania in Colorado, We are working toward watching online sports betting in other states that have passed lot, such as Illinois, Michigan, Tennessee and Virginia.

We're also in the process of working with regulators in West Virginia to hopefully won't tracking.

We will continue to invest in our product and technology capabilities. If we look to stay ahead of the competition truly differentiate our products in the market.

Our ability to create new content quickly during this period with enabled by the technology and product investments we have previously made.

These new products have allowed us to continue to acquire and retain users and we will be monitoring activity on these alternate offerings once traditional sports return.

Continued traction and engagement with products centered around E sports and pools based on pop culture positively affect tacking LTV overtime.

Lastly, we will continue to work towards migrating to our own proprietary software and investing in light bedding and other unique offerings for American sports.

Strategically we believe this will create a key differentiator for draftkings, helping us win with consumers and partners and also improving our long term margin profile.

With that I will now turn it over to drafting CFO Jean Marc.

Thank you Jason as many of you are aware, we completed our business combination with SP Tucking Diamonds Eagle on April 20, Threerd Accordingly, our results for the first quarter ending March 31st reflect those of legacy dropping even legacy SB tuck each on a stand alone basis.

Starting with all drafting despite could we generated 89 million of net revenue in the quarter, which was an increase of 30% versus prior year, notably precluded prior to March 11, our revenue was up 60% versus prior year.

These are both are due to our strategy of launching new steep well and growing revenue.

In this quarter, we were alive in five states for online sports budding versus the first quarter of 2019, Indiana.

Our New Hampshire, Pennsylvania, and West Virginia.

Due to coated with several sizable revenue opportunities attached to Q1 sporting events, such as March madness, as well as several weeks of young theory and each LTV. Nevertheless, we're pleased to have generated 30% revenue growth compared to the prior year.

Our argument that such as online blackjack, and roulette was not impacted by cobot 19 and exhibited strong results. Additionally, we saw acceleration I give me activity after major sporting events stopped and people began looking for alternative forms of entertainment.

Despite cobot 19, we experienced strong loved and our loan growth for the quarter. We grew our loves to 720000 up for the 619000 over Q1, 2019 and increasing 16%.

No Artemis decreased to $41, a free $37 last year, an increase of 12%. We're pleased with our unique pair growth and with the success, we have achieved cross selling our customers into new product offering.

Adjusted EBITDA for the quarter was negative 49.5 billion this year versus negative 20.4 million last year as an expected or loft widen primarily due to our please investment in connection with launching a product offerings and five new seats.

Using vessels in the form of promotions and through marketing are consistent with our new state playbook and are expected to drive long term profitable growth.

As we begin to see impact of Cobot 19, we reacted quickly scaled back external marketing spend in the March period.

In addition to this investment into new seats, we also invested into our organization more than half of our new headcount was in our product and technology teams to support our continued innovation and focus on the diversification of our products. Our compensation expenses are already beginning to level off as we begin reaching scale throughout different parts of that worries.

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Our net income of negative 68.7, new he was in line with her own expectations.

Now turning to be tech or let's be tech revenue generated 22.6 million euros and increase of 3% versus Q1, 2018, notably pre covert prior to March 11th our revenue was up 19% versus prior year.

Adjusted EBITDA was negative 851000 your range versus prior year of positive 4.3 really in Europe.

Be tech was well on track to achieve positive EBITDA for the quarter until cope with it and we anticipate a return to profitability once major sports dessert.

That's all you can appreciate providing guidance in this environment, it's difficult for many companies and we are going to look section given the significant with certainty around how kubat Nike what impacts the sports kind of wonder we're not providing 2020 revenue guidance, we are comparing internally for all possible scenarios and as we learn more.

Finally, we will incorporate our learnings into our core constant.

I want to reiterate something Jason Robinson earlier, which is based on what we know today, we do not anticipate any reductions to our fiscal year 2021 revenue projections and we continue to believes that the long term growth prospects of the business are strong.

Finally, I would like to highlight our strong balance sheet coming off of the successful because the combination in public listing on April 24, we are well capitalized with nearly half a billion dollars with cash on our balance sheet Clemens.

We are major sports the encore per a protracted period of time, we expect to be able to manage our company cash burn to $15 million to $20 million per month, we are able to achieve these low levels of cash burn due to our highly variable cost structure. The majority of our Cogs are tied to revenue and external marketing is at our discretion there.

An opportunity to improve that burn rate as we continue to diversify our offerings and grow I gave you activity.

We are concluding our remarks for this period, maybe we'll open the lines for questions.

Thank you, ladies and gentlemen, easy you have a question Andy Stein yesterday dived in one on your telephone keypad.

To withdraw your question just bear this out key.

Again, if you have a question Justin just die in a number ones he touched some telephone.

My first question is how I'm talking about him with Morgan Stanley.

Hey, good morning, guys I'm, sorry, Jason Robinson your prepared remarks, you talked a little bit about how this year, it's likely we're gonna have a lot of overlap in the sports calendar can just talk a little bit about how you think that's going to affect yeah, you're you're you're you're not an error or.

Through and your I'm kind of how you acquire customers this year versus a first of the took for you. Thanks.

Yeah, I think thanks Thomas so.

Obviously, a lot is still moving around a currently as an example, the masters is scheduled for November so very different overlap in terms of sport calendar a than it would have been had it in Ah played as planned in April.

And there will be other examples like that but hard to know exactly what they will be without all the sports calendars fully developed yet for the year.

That said I think to answer your question assuming there is overlap usually what we've seen is when they're more popular sports going on overall activity and overall revenue goes up.

That is something that you know we see typically for example in Q4, a when we have a lot of sporting activity going on a each year. So I would expect there will be similar impacts, but it's very hard to know could the combinations or just totally.

Ever been in prior years, but generally speaking I would expect that to create more activity from a customer acquisition standpoint, I think the team is going to take the same approach. They always do which is you know every single a creative every single a piece of media everything that we put out there has a target.

In mind and is tied to the creative and offering that we are we are going after what that target and you know I think they will try to do is just test into everything hard to know if it'll make sense D. Build on the example that I am I mentioned earlier to acquire heavily on Masters went overlapping with football.

So it may be different then when its overlapping a you know with other sports. So we're going to test everything and we'll learn a lot and who knows how applicable probably not so much hopefully not so much those learnings will be for future years, but we're able to actually pretty quickly reiterate in year. So lot of the testing we do is really being optimized mode.

And by moment I'm. So that's that's the approach we're going to take.

Okay, and then in terms of the business. It is going on right now so the strong online gaming business as well as you know the more unique businesses like Korea, and baseball and ER and that you sports I mean, what are you seeing and those customers like how different are they.

And then your legacy customers and on the I give me a piece how much of that business is legacy customers versus new customers like.

So across the board, it's mostly our existing customer base. We've had some new customers come in that are kind of you know just typically we acquire customers throughout the year and I think you know probably more do than anything to people being home a we've seen pockets, where that's gone up.

But hard to know that if theres, they got particular and new segment or anything that's being attracted to some of these offerings. My guess is mostly existing customers and mostly the same profiled customers we.

Typically than acquiring.

Okay. Then just final question on SB Tech transaction closes a little less than a month ago, but any any surprises so far anything positive or negative that you've seen.

In the past month thanks.

Yeah, I wouldn't say that anything surprising but.

And really, especially given you know the challenges of not being able to <unk>.

It's been really going about as well as we possibly could I hope I'm very good chemistry between the team you know Inc.

In the world of zoom into almost as good as being in person. So we've gotten to spend a lot of video base face to face time, together and I also think there's certain element debjit unification that happens when there's a crisis externally and a lot of people feel fortunate that they're part of a business that a you know has I think really got.

Strong outlook in terms of you know the future and I think a lot of people are looking around at some of their friends and colleagues in other industries that are getting hit pretty hard and actually think in some ways. That's helped bring the teams together, but overall, it's been a really positive early experience and I'm very excited and very pleased with the progress we're making.

Great. Thank you.

Thanks, Tom.

Okay next question on strong Ryan seems all with Craig Hallum Capital. Please go ahead.

Great. Thanks for taking my questions and congrats on a completing the merger.

First off just a on Igaming. She mentioned an acceleration there anyway, you can break that down kind of between new users a plane versus the legacy users that are playing more and then secondly, what are you seeing in April and thus far in May.

So.

We are we aren't disclosing any specific I any metrics, but what I will say is if you look at the publicly available reports from New Jersey for last month. The overall I gaming market grew I believe approximately 118% and resorts digital which is tracking skin partner grew about 126.

<unk> percent.

So we're very pleased with the growth we're seeing in that product relative to the market and I think the you know.

Not surprising, but certainly something that I'm, we're continuing to focus on and I apologize what was the second question.

Just what trends so we've seen new Jersey data for April, but what trends are you seeing thus far and may have those continued accelerated just directionally.

You're talking about in terms of I gaming or just overall for the business.

Gaming specifically.

Yeah. So I think really it's been a continuation of what we've been seeing in April a I think that you know there are some some things that are very based on seasonality in sports, but I gaming is actually a remarkably consistent throughout the year, though I think that.

Really it's kind of been similar to what we didn't see any brock.

And then switching over to marketing I'm still lack of major sports right now, but also we've seen.

Cpms, Google Facebook cost.

You know temporarily reduced year. So anything you can say about user acquisition in terms of number of new users towards any metrics realize early but on CAC LTV or payback periods or however, you want to want to think about it.

So.

Any right now what we're trying to do is just test everything and I think that you are right. Given the you know reduction in some of the price of media that you're seeing particularly in some of the big online some of the big digital channels, there are opportunities that perhaps weren't there before it to get more so.

Scale and reach and at the same time theres less sporting events to advertise so.

Those two things definitely counterbalance each other so what we're trying to do is just test into everything figure out faster then hopefully our competition what works and what doesn't and a you know get those learnings into action in the marketplace.

And then last one for me and then I'll turn it over to someone else.

So in the non traditional categories you talked about I mean, you sports pop culture virtual sports et cetera are there any one that jumps out that the people are really enthused about and you're seeing more volume from and then also how do you think about those categories on the non traditional sports categories over the next several years. Thanks.

Hey E Sports is notable stand out we launch see ASCO and several others and it's been really or you know.

Strong volume compared to what E sports traditionally had had seen.

And the other thing I'd mention or the simulated sports, particularly the simulated games that are using Matt and yeas, Matt and that people are playing fantasy in such with and you know to me that.

Kind of makes sense right that there's a lot of football fans that one football year round and you know, it's probably even enhanced by the fact that there's not a lot of other sports on TV and you know there's a lot of people that are at home with you know looking to watch things. So I think that that's that's something that we're keeping an eye on and there could be something.

Attention to extend the NFL season really throughout the year do simulated sports and I think it will also work for other sports, but in particular I'm excited about the NFL because part of what you NFL product you know, it's a scarce product. It's a you know a lot there a lot fewer NFL games and it's a shorter season than most of the other majors.

So I think theres a lot of potential there and we do see a lot of people to deactivate towards the end of the or after the Super Bowl and many of them activate sporadically throughout the year on sporting events that are popular like the Masters. For example, a you know started baseball season brings new activation much madness of course.

But there is a group that just loves the NFL and can't get enough for the NFL. So I think if you can find a way to give them.

At NFL experience more year round, there's there's something there.

Great. Thanks, guys and good luck.

Thank you our next question for Michael Graham with Canaccord. Please go ahead.

Good morning, and thank you my first questions just on the product road map and can you talk about.

As you start to leverage SB checks technology into sort of alive or in play betting like windows that start to happen in can you talk about the order of magnitude [noise].

Opportunity in terms of increasing pricing or sort of the effective revenue yield on those those bets.

So I think right now we're still in the early stages of planning around integration and migration or really the the goal for US is to make sure. We have a high quality migration and you know are putting that above really speed is the approach that we're.

Taking a at the same time, we have made good progress. So I think you know we're probably looking at at least mid to late 2021 before you're gonna start to see some of the types of things that you mentioned really an action but.

And could be longer, but I think the progress we're making its been has been they a solid so far so I feel good about that timeline.

As far as to say, but you know our belief economics may be that like betting you know due to the frequency of it and due to you know how rapid fire. It is that a there's sort of less or you know kind of nor on a market norms around where pricing ends.

If you look at for example, pregame NFL lines across all the Sportsbook, they're typically not too different sometimes you see a half point difference here, they're slightly different odd, but the market's kinda market, whereas live betting is so rapid fire that a there is not time for people to price shop, and so its not as efficient are perfectly.

Price doesn't market. So you know those types of situations I think create opportunity. If you have the best algorithms the best pricing models to differentiate for sure.

Okay. Thanks, and then on your relationships for us be would the you know in state license Casino operators can you just comment on how long those agreements typically last in.

Do you think as you gain scale is there opportunity to you know achieve some some leverage there overtime.

So already I think that you know from the first.

Deal that we did to now its certainly become more clear that we are a preferred partner and I think we've gotten a lot of really ER positive tailwind from that.

You know all the deals are a little bit different and we don't comment on the specific ones but.

You know really the approach that we take is we want to find the right partners and we want to make sure that we have the best combination of flexibility on our end and security for the long term and so that's the approach that we take when we striking deals.

Well keeping some in the last one for me just you know in thinking about the opportunity to acquire new players one of the.

Clear areas is sort of the the illegal shadow market, you know offshore sites and that sort of thing.

In the major difference from the players perspective might be taxation can you just talked about how you think about that and do you.

React to that are addressed with incentives or just you know how is that issue shape. Your strategy. Thanks a lot.

Sure. So are you referring to taxation from the states or taxation on winning.

On winnings.

And then I mean, our hope is that most people want to pay their taxes and you know it is illegal to not report winnings, adding a lot of people actually report illegal winning believe it or not there is a an area where you can enter gambling winnings on the IRS farm, which include illegal gambling winning so.

I think that you know it's hard to say it to some extent you know the types of customers. We want are the ones that are following the law and.

Includes paying your taxes, so I'm I think most people feel like if they are fortunate enough to win a large enough sum of money that that triggers a attached reporting requirement that they are happy to pay it but you're right that there there will be some segment that maybe are trying to avoid paying taxes and that just something we simply can't compete within the illegal market and it's also I know this isn't what you asked but it's also.

Porton and also why we hope and and so far have seen that states are being very reasonable at the tax rate, they're charging because that also if not done appropriately you can have an impact on how much cost the customer and so far the states have generally been sensible about that and we've been able to be competitive with the illegal market on pricing.

But that's something that's important to maintain because otherwise it will be very challenging to disrupt the legal market and actually I think thats. The more important thing I think most people.

I would rather pay their taxes than than than break the law, but I do think people don't Wanna get worse deal worst price and I think it's important that we're able to maintain competitive pricing, which you know will be an evil sensical taxes and regulation.

Thank you.

Thank you. Our next question comes from Greg Good that well Northland Securities. Please go ahead.

Thanks for taking my questions.

First.

Can you talk about maybe any early success, you're seeing cross selling your DFS users to the new products that kind of just went online this path as month in Colorado, and Pennsylvania, just opening up right gaming.

And maybe how as early betting that at least that's.

So.

I gaming is a little bit different than sports betting and that all of our content is available and I gaming, whereas of course without a lot of major sports playing sports betting.

You know did not have all the chip traditional content available that said as you know I would say that so far what we've seen has been ER positive and in line with are better than what we expected. So you know very early we literally just launched these products in the last few weeks, but so.

Are we think are you know what we're seeing is in line with or better than what we expected.

Okay, that's good to hear.

And then on E, maybe discuss a little bit of your proactive marketing measures that you've taken maybe to generate some interest on new users in the platform with not many live sporting events going on.

It's been test test test Weve run you know I think at this point 50, plus different types of content in our free to play pools, we have stimulated NFL, Matt and games going on I think on Sundays up to 10 to 12 a day.

You know on the weekends I believe it at that level. So we've been ramping up the things that are working but it's been test test test and double triple down on the things that work and.

You know that's that really starts with testing on the existing traffic and user base, but then once we see what's working we extend that into the external marketing strategy I'm. So kind of step three is a really to focus our customer acquisition efforts on the things that we know are already working to engage our existing customer base.

Got it that's helpful and all last one for me and sorry, if I Miss this too, but did you comment or at least kind of quantify the impact that you're seeing on payer activity in April and May as it kinda compares to the second half of March in any way just with respect to unique payers or average spend per player.

We arent you know it's kinda.

Much like the rest of the world. It's been very fluid. So you know literally one week story, maybe different than the prior weeks story. So right now we're kind of waiting to for the dust to settle before we started putting any.

Any commentary out there about what we're saying.

Okay sure Thanks, guys.

Thank you.

Thank you our next question Eskom, Joe stuff with Susquehanna.

Oh, thanks, very much good morning, everyone.

I wanted to ask a maybe on a longer term question just on the existing Gypsys DFS business and.

I guess, an education or grow say over the next couple of years for that business to grow tough.

Revenue low single digits and I was wondering if you can give us maybe a little bit more perspective. It you know in terms of the development of that market is it a city likely to be more user driven is it likely to be more you know frequency of play what's the you know how does how do you guys thinking.

Though the growth of that market in particular given.

No you're shifting for some market share.

So I think right now there's a very strong interplay between how that market will look in grow and paces state legalization and specifically what I mean is when for example in New Jersey, when we introduced a all these new products around you know online retail space.

Setting I gaming.

We did see some cannibalization of daily fantasy sports So the degree to which it will grow you know whether its low double digit single digit they're flat will depend on how quickly the other states.

They are in the process of either rolling out a sports betting we're considering legislation on sports betting move.

From a strategic perspective.

Certainly it's a an important monetization engine for us so that is always a focus and we're always testing and looking for ways to optimize there.

But perhaps more importantly, it's the number one customer acquisition channel for us when we roll out online sports betting I gaming and other products and state. So its really most important to keep users active keep building that active base by acquiring efficiently on the DFS platform a and.

Then having really strong data on those customers. So that once we do see online sports betting or other products legalized in their state, we know exactly how to cross sell them.

[noise], Okay and as it relates to you know some of the stage and trying to expect or trying to anticipate exactly.

You know some of those the larger ships in particular that you had mentioned earlier in the call.

You know I guess can can you give us an updated in general about maybe the interaction between you know for legislator Youre regulatory team and station.

All the things that need to be done in order to be able to launch and go through the compliance process with the state says is that largely I would imagine any true certain extent that's been largely disrupted.

Or what is the status of that and I'm talking about obviously was [noise].

Tennessee in Michigan, and so for trying to anticipate obviously when you know they would allow you guys are keeping agreement to launch.

So oh, let's say a quick word and then I'm going to turn it over to our Chief legal Officer Stanton Dodge see if he has anything to add but we're continuing to stay away from predictions on that I think you know the current environment has made it even more challenging dependent exact date on it so.

You know, we're working hard with with everyone to try to move as quickly as possible. But are you know there's also a recognition that you know there's a crisis going on and this may not be there number one priority at the moment.

So we have to balance that but I think that you know the approach we will continue to take is.

As we get enough information to feel confident and putting the kinda date or day range around it we will absolutely be transparent like that and at this time, we don't have enough information to do that.

And is there anything I missed the you wanted to ask.

Yeah, but I guess I'll just say generally every state is different and unique so there's no real standard playbook of expectations, but generally speaking to give the state up and running you need to pass a law.

In some states requires you go to the ballot such as Colorado, then you need to get regulations past and then get license and with respect to whether you've seen any disruption in that.

You're well aware most legislatures hub without a session, but are seem to be slowly coming back, but you know much towards like Colorado still launched on me first of the mix. It is and we're also able to get I gaming with regulations finalized and get us licensed in Pennsylvania.

Okay and.

Just finally, one clarification on on.

On your gross fee categories, but can you just remind remind us with respect to how much or how much exposure you have to you know the European soccer leagues in particular, the Premier League, which may or May not started up sometime in June I was just cure.

He stepped up.

So from the.

Drapkin perspective, the old Draftkings perspective, it it to.

Meaningful sport, but not a significant portion of our revenue each year.

On the old SB Tech side, given that the vast majority of their businesses international it's more important its almost two thirds for them. So it is very significant over there are so we'll see a meaningful impact on how you know that all shakes out to the b to b.

Revenues, but I do not expect that significant have an impact to the BDC revenues.

Thanks very much.

Until our next question Jack Kelly with Oppenheimer. Please go ahead.

Great Great. Thanks for taking my question just back to the life betting I guess with the lack of sports and less velocity on your systems. I mean have you been able to accelerate anything on your product road map in regards to life betting and then as the leaks start to need more rather.

The new or with lack of fan attendance.

Does this open up opportunities for more partnership opportunities to help them generate more revenue or makeup lost revenue from from.

Stands now attending.

Great question, so on on the first topic.

We have definitely been doubling down in terms of you know our product road map or long term product road map of which slide betting is a clear an important part of it perhaps you could argue a on the sportsbook product the most important part.

We also have in balancing that with utilizing this opportunity to expand our offerings on new sports and daily fantasy sports pushing out more E sports and other things. So it's been a combination of content expansion due to sort of the lack of traditional sports content out there along with proper.

Yes against our medium to long term road map on things like live betting, which really won't start a you know in a visible way to the consumer really take shape until probably second half of next year.

But I have been very pleased with the progress you've made across all of these things I think the team has really stepped up and you know I think in some ways, where more productive than ever right. Now so we're making a lot of progress across a lot of different area.

And then I apologize what was the second question.

I'm working closer with the leagues I'm, just trying to help them generate more revenue than game wagering lack of attendance.

So you know the leagues are certainly just like the whole sports World Valuating, what they saw means for them certainly a you know a lot of revenue depending on the sport depending on the team it varies but a lot of revenue does come from in stadium and their contemplating if there were to be or you know some kind of a reduction in.

In that revenue, what could that possibly be replaced or with their mitigated by so you know those are discussions we always have and I think this particular situation. The pandemic had in some ways accelerated interest in certain areas. As an example, I think there's been more significant interest in.

Simulated sport.

You know products that I was I was referencing earlier than there had been in the past because you know the thought in the leagues mines are hey, if we do have to postpone or cancel a shift around the calendar how do we engage fan.

I think theres been more focus on tying the digital experience to the television broadcast because that thought is that more fans in ever could be consuming content from home.

So you know like everyone I think there's still a lot of unknown that I think will you know kind of effect, where things in terms of potential partnership opportunities steer towards but.

You know just like any situation, where there's major shocker disruption a lot of things that maybe where less interesting or not really on the table before now potentially on the table. So we're trying to be at the center of all those discussions and be helpful. Wherever we can.

And then just one more question for me I know, it's still hard to make predictions, what's going to happen, but it does seem that the.

M.B.A. might currently push they're starting to seasons the Christmas any any thoughts on that and how that could impact you know financial performance.

First the and this is just personal opinion I love the idea of the M.B. starting on Christmas just as a fan I feel like that's the day every year, it's almost like Thanksgiving you know with football that I think of M.B.A. is the major sport and you know as excited as I think people are for the started the season anyway, it's still early.

In the NFL season, when NVH typically starts versus you know starting in late December might actually I think create a bit more focus on the N.B.A. versus you know still being and pick of the NFL. For example, if your favorite NFL team is may already be out of it by the time Christmas heads and that's not the case, sometimes when.

You know, it's mid or late October when the N.B. traditionally has started I'm sorry, I personally loved the idea as far as impact on revenues you know, it's really hard to say, it's you know unprecedented we've never had that situation before and you know my baseline expectation is I don't know why it would be that different it's just basic.

Pushing the same calendar out a month or two but are you know it's hard to know because it does change where the overlap is and you know more specifically a assuming that the calendar is not condense that the idea of starting on Christmas means you play more deep into the summer there'll be more overlap with baseball. There's also and I think this could be a pie.

Positive, there's just a lot less going on in the sports World. During the summer then there is in the fall. So in some ways you know there might be more incrementality to having the playoffs for the M.B.A. or you know and the season, you know kind of that sorry, the regular season gains for the end being the summer and then the playoffs and this summer.

As well could potentially be less competitive with a lot of the other sporting events that are happening during the fall in that could create some positive impacts, but really hard to say I'm. We're all going to have to observe how the data comes in if they do make that change and.

You know once we do it will be pretty quick it being able to update our forecasts and right now on you know it's just the best educated guess and we don't even really know what the schedule is going to look like so even on that front, it's still guessing game.

Thank you.

Okay, and now I will like to turn the call back and Jason Robinson for his final remarks.

Thank you again for joining us today for our first earnings call. We appreciate your thoughtful questions and look forward to continuing the dialogue with everyone. As discussed earlier, we're very pleased that our product and technology investments have created avenues to continue to engage our customers. While most major sports are on hiatus and I'm very proud of our employees.

For the customer centric approach to designing and marketing these new offering.

Furthermore, I am very confident that regardless of how long covert 19 disrupt our daily lives Draftkings is well positioned to continue innovating on product building market share and working with policymakers to expand the addressable market. We appreciate the support our shareholders have placed in us and we hope all of your as excited as we are to watch our vision unfold over the coming.

Years, we're also really excited about executing in.

Thanks, again, I hope, everyone is staying safe and well during these challenging times and we look forward to speaking with you again soon.

Ladies and gentlemen, thank you for participating in today's program. This concludes that and you may now disconnect.

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