Q2 2025 DraftKings Inc Earnings Call
Good day, and thank you for joining us. Welcome to the DraftKings Q2 2025 earnings conference call.
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I would now like to hand the conference over to your first Speaker today, Mike, delalio, senior director of investor relations. Please go ahead.
Good morning everyone and thank you for joining us today certain statements. We make during this call May constitute forward-looking statements that are subject to risks uncertainties and other factors as discussed further in our SEC filings that could cause our actual results to differ materially from our historical results or from our forecasts.
We assume no responsibility to update forward-looking statements other than, as required by law.
During this call management will also discuss certain non-gaap Financial measures that we believe may be useful in evaluating DraftKings operating performance.
These measures should not be considered in isolation or as a substitute for DraftKings Financial results prepared in accordance with gaap.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release slide presentation and business update, which can be found on our website, and in our quarterly report on Form 10-Q filed with the SEC hosting the call. Today, we have Jason Robins, co-founder and Chief Executive Officer of DraftKings, who will share some opening remarks and an update on our business. Following Jason's remarks, our Chief Financial Officer, Alan Ellingson, will provide a review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robins.
Thank you, Mike. Good morning, everyone. And thank you all for joining draft King, set records for revenue and adjusted. Evita in the second quarter as Revenue, growth accelerated to 37% year-over-year.
We are pleased to be maintaining our fiscal year 2025 guidance, with revenue expected to be closer to the high end of our range as strong underlying momentum in the business and sportsbook-friendly outcomes in the second quarter position us to absorb an exciting new state launch.
We are sharing 5 key takeaways today.
First, we are in the early innings of adjusted EBITDA growth.
Product enhancements are driving strong Revenue growth while prudent cost discipline and efficiency initiatives across the organization are delivering meaningful adjustments. Our second quarter adjusted, Evita was over 300 million dollars in double our prior record
Looking ahead, we have conviction in our profitability expanding further, as we drive towards our 30% adjusted Eva to margin Target over time.
Second draft teams is positioned for Success, this fall with the upcoming NFL and NBA Seasons. We continue to innovate our number 1 rated sports book product, delivering an experience that moves uniquely at the speed of sports. This manifests, in a best-in-class live, betting product, along with Hyper flexible merchandising and social features that allow customers to engage with the biggest Sports narratives as they unfold in real time.
Third sport outcomes tend to normalize over the long term but typically benefit either the sportsbook or customers in the short term. May and June combined sportsbook outcomes benefited the company and added $110 million to our revenue.
Forth. We continue to monitor events surrounding federally, regulated prediction markets and are actively exploring ways to enhance shareholder value through this opportunity. As always, we value our relationships with both industry, stakeholders and policy makers, and we'll work collaboratively as we evaluate next steps.
Fifth. We continue to allocate Capital to Target, the highest risk, adjusted returns and maximize shareholder returns over the long term. And the first 2 quarters of this year, we repurchased 6.5 million shares through our stock repurchase program while continuing to invest in organic growth. Initiatives with that. I will turn it over to our Chief Financial Officer. Alan alanson.
Thank you Jason. I'll hit the financial highlights including our second quarter 2025 performance and our fiscal year guidance.
Please note that all income statement measures discussed, except for Revenue are on a non-gaap adjusted iPad, do basis.
As Jason mentioned in the second quarter, we achieved company records for both revenue and adjustability.
Revenue increased 37% year-over-year to $1,513 million, and we generated $301 million of adjusted EBITDA, representing a 20% adjusted EBITDA margin.
Sportsbook, net revenue, increased 45% year-over-year, which exceeded our expectations.
Net revenue, margins increased over 230 basis, points year-over-year, and also set a company record at 8.7%.
Sports for candle, increased 6% year-over-year to approximately 11.5 billion, live betting handle increased 16% year-over-year as we continue to innovate and extend our lead in that category.
Buckfield sports book called percentage increase 100 basis points year-over-year to 10.9% and actual Sports were called percentage and exceeded 11.5% due to Sportsbook friendly outcomes.
Our parlay handle mix increased 430 basis points a year-over-year.
For proportional reinvestments as a percentage of gross Gaming revenue improved year-over-year by nearly 600 basis points, due to both Sportsbook friendly outcomes, as well as continuing optimization of promotions.
We also expect to continue benefiting from existing customer accounting, for a higher percentage of our overall customer mix.
Are giving that Revenue was consistent with their expectations and increased 23% year-over-year, driven by strong growth and active eye gaming customers.
We are continuing to see engagement with jackpots, increasing rapidly as gross Gaming revenue increased over 100% year-over-year.
In gross margin increased to 48%, increasing more than 400 basis points year-over-year as a result of higher sports book, hold percentage and improved promotional efficiency across our product offerings.
Our operating expenses, including marketing continue to be in line with our expectations. We are leveraging our scale and brand to drive, highly efficient customer acquisition, will continue to exert cost discipline across the organization.
We are also already seeing some benefits utilizing artificial intelligence and other new technologies.
Now, I'll touch on our fiscal year 2025 guidance.
In May, we guided fiscal year 2025 revenue of $6.2 billion to $6.4 billion and adjusted the EBITDA guidance to $800 million to $900 million.
Today, we are maintaining those ranges.
More specifically, we are on track to deliver Revenue close to the high end of the 6.2 billion dollar to 6.4 billion range due to sports book, friendly outcomes in the second quarter as well as continuing strengths across our core value drivers.
We are on track to deliver just the IBA near the midpoint of the 800 million to 900 million range. As our higher annual revenue, positions us to absorb our anticipated Global sports book, launch from Missouri.
Notably, our guidance now includes anticipated Financial impacts from DraftKings. Launching mobile sports betting in Missouri later. This year,
Our guidance also now includes anticipated Financial impacts from higher tax rates in New Jersey, Louisiana, and Illinois.
The company guidance for fiscal year 2025 does not include the potential launch of a predictions Market offering.
We also providing the following fiscal year, 2025 guidance detail.
We now expect our supports for Revenue margin to exceed, 7.5% ahead of the range of 7 to 7.5% that we had provided last quarter.
We continue to expect an adjusted gross margin of 46% and thank you for more than 300 basis points year-over-year compared to fiscal year 2024.
We continue to expect stock based compensation expense to represent 6% of Revenue in fiscal year 2025.
That concludes our remarks and we will now open the line for questions.
Thank you. At this time, we will conduct the question and
Answer session.
As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced.
To withdraw your question, please press *1 1 again.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Sean Kelly of Bank of America. Your line is now open
Hi, good morning everyone and thank you for taking my question. Um, Jason, I want to kind of start off with a multi-part question, on prediction markets, if I could, uh, so 3 Parts here first, you just, how do you think about sizing the potential investment or opportunity for DraftKings at this early stage? Uh, second, you know what's the importance here of kind of owning your own Tech stack. I think we see some parallels to the way OSB was built out and kind of curious for your thoughts there. And then lastly, just how important is it to be a first mover especially if there's a bit of a land grab here as some of these platforms start to ramp up marketing uh around NFL. Thank you very much.
Uh, thanks Sean. Good morning. So uh, let me kind of take those in order. I think you know Tam is a tricky question because obviously you know the the products are at a very nent stage. Um, so it depends on how they get built out. But I think, uh, you know, the existing, uh, sort of states that we have live OSB and provide some kind of Benchmark as you think about Tam. Um, in terms of the second question on Tech, I think it's too early for us to say, you know, we're we're obviously, uh, evaluating different options and following the space, but we're not really, um, you know, intimately familiar yet with what the different technology components are so really tough to say. Um, and then I think on the first move or question, I do think that being an early mover in a space, like this can be important. I also think that, um, you know, being a literal first mover may not be as important and there are downsides to that as well. Uh, so
So you know, we're evaluating obviously, we have a lot of stakeholders State Regulators relationships with tribes others that we want to make sure we consider as we think about what our different options are. And, um, you know, we're we're keeping a close eye on it and figuring out what we want to do.
Thank you.
Our next question comes from the line of David Katz of Jeffrey's your line is now open.
Uh good, good morning. Uh, and thanks for taking my question so I I wanted to you know, I I guess you already triple clicked on prediction markets but I but I feel as though there probably are you know a dozen issues related to that as it as you know as it relates to DraftKings. Um you know it have you done any work in terms of sort of the crossover you know, customer um you know are there you know that you touched on the relationships just a bit which I think is you know, seemingly 1 of the important issues and you know, you also noted, you know, State Regulators are, are those, you know, conversations that are in some stage of evolution or, you know, do we know, you know, where where they're at. And I think the ultimate part of the question, uh, is you know, how you're thinking about sort of the stock and the cash flow, you know, today's a, a, a, a
Positive day because we, you know, we get to raise numbers a little bit, you know, for 1 of the first times in a while. I I know there's, there's probably 10 questions in there and I apologize for that. Thank you.
All right, I'll try to answer them. But, you know, I I think a lot of the things you mentioned are are considerations and why we're taking a measured approach as we think about it and obviously, you know, uh, hard to kind of comment on specific discussions that we may or may not be having. Um, but I think you can assume that at this stage, you know, we're more in monitor mode in terms of active discussions like that. So, um, you know, a lot of what I think we need to see will come from watching how things unfold with others that are currently, uh, offering prediction markets. And I think we'll kind of have to see how that goes and evaluate. It's all happening in very fast, real time. Uh, so, you know, definitely a lot to think through.
Okay, I'll take it. Thank you.
Thank you.
Our next question comes from Stephen, grappling of Morgan Stanley. Your line is now open
Hey, thanks. Um, as we think about longer term opportunities to streamline costs and or Offset, you know, some of these tax increases. Can you just help us think about what opportunities exist within State, access fees, um, data rights fees, and or payments, or otherwise, thanks.
Yeah, I think you're right. That there is a good amount of opportunity across the Cog stack. So, uh, certainly uh, you know, some of our agreements that are older, uh, we believe there's some opportunity to reduce the rates there and, and a win-win, because it'll be probably more revenue for the partner and dollars but less a a, as a percentage. Um, and then, you know, on the payment side, uh, we haven't really spent as much time as we could, and it's 1 of those things that we, we keep kind of saying, we know, is out there. And at some point, we're going to put a lot of effort towards optimizing we believe. There's, there's tremendous value, uh, to be unlocked there as well. So definitely I think we view that as uh, you know, those 2 things, as big upside and there are also other parts of the cogs back to, um, we're constantly optimizing our systems to be more efficient so our Amazon web services bills, don't go up uh, at the pace of our Revenue. Uh and a number of other AI initiatives that were embarking on. Now, can also really help on that front as well as on the face.
Cost side. So I actually feel like as much as we talked about the revenue growth and the demand, and obviously, we're very excited about that and really excited about the growth. We had this quarter, I think that there's also a ton of opportunity on the cost side and, um, the team's really a rallied around AI, which is exciting too. I think that's just really, uh, you know, we're really just scratching the surface. Now, there's going to be some big unlocks that come from that over the next several years.
Thank you.
Thank you.
Our next question comes from the line of cars. Lamp and a BT, your light has now opened
Thank you, I've got 2. Um, Jason, I'm going to take the bait on AI. Um, you said that we're scratching the surface here, there were some big on locks, it sounds like, um, you know, you've obviously referenced this and shareholder letters and on calls in the past. But are we at a point where, um, maybe that could start to have, uh, a more discernable benefit on, um, the top line as opposed to just sort of expands optimization? Um, second question is on IG gaming, you guys called out some headwinds and adjustments that you guys wanted to make for a promos and rewards last quarter? Just curious. Now that we saw a revenue acceleration, did do you did I have the benefit that you were looking for and, and was that benefit sort of fully realized in Q2 thanks a lot.
I think I gaming is starting to ramp back up to where we want it to be but still not quite where we want it to be yet. So, um, the momentum is there but I do think there's more work to be done and I feel like there's more upside to the, you know, rates that were growing at now, uh, in terms of your first question, I do think that more of the focus because it, it's just something we could do. More organization wide is on the expense side. The, the simple, you know, sort of areas or really any kind of workflows that are manual. Now, uh, all of those can be automated and we don't necessarily need to rely on a pro, uh, you know, on our on our engineering team. Uh, to be able to do that, we can rely on those running the programs and those running the processes to do it, uh, with the tools that we provided them and then separately, we're biting off. Uh, usually, you know, we kind of try to focus. And so, I think we view there's, you know, a small handful, uh, of Topline potential Topline driving a
AI initiatives that we are heavily focused on over the next 6 to 12 months. Um, you know, in areas like trading it's a good example where there's just so much going on at once that adding AI agents, to be able to Monitor and react, uh, certainly can provide some upside. Um, so there are areas like that that I do believe will have impact on the top line. At this point, we don't have enough data yet to say, what that impact could be. So, you know, we haven't really, uh, contemplated it and thinking about, uh, this or next year's guide,
But I do think that there is is going to be upside on the top line that we unlock as we embark on these initiatives.
Understood, thank you.
Our next question comes from the line of dental of JP Morgan. Please go ahead.
Hey, good morning everyone. Thanks for taking my questions.
Secondly um, you know in late 2023 you guys had an investor day and framed out 2026 expectations and I think it was 1.4 billion of IBA. I know you're not giving updated guidance today, but there's been moving pieces in that, you know, namely the tax increases as well as, you know, Alberta timing, you know, is there any way to just frame out the impacts from those 1 off? So we can better calibrate expectations for 26. That's it. Thank you.
Yeah, great question. So on the first 1 uh I you know, really think the Big Driver of structural hold Improvement, has been bet, mix obviously, there's other things we're doing to optimize but that's really the Big Driver parlay. Mix is up 430 basis points, which drove that structural hold up. So, uh, really excited about the progress there and then, in terms of next year, I think you're right that, you know, when we did put out those numbers, we hadn't had some of these tax increases which have amounted to you know around $200 million if you look at next year. So um you know there have been some underlying uh you know value drivers that have been outperforming too. So I think we're able to offset some of that but I don't think we'll be able to offset all of it.
Thanks so much.
Thank you. Our next question is from Robert Fishman of Morphin NES. Please go ahead.
Hi, good morning. Um, there are some higher profile sports streaming apps that to launch in the next few weeks ahead of football, season, ESPN, and Fox 1 come to mind. So can you just talk about your open day openness to partnering with either these or other sports focused streaming app in general, for crosselle opportunities, or potentially, even look to enter into more formal exclusive relationships going forward and then separately, um, after flutter completed, its Boyd deal.
With the uh restructured Market access agreement, can you discuss the opportunity for DraftKings to rework your own Market access deals? Given your stronger position in the market today versus a few years ago. Thank you.
Yeah, I do think Market access deals are are, you know, an area of upside along with many of the other cogs levers? I mentioned earlier, so, um, I think you're right that there is some upside to be had there when we renegotiate some of those deals and some of them were long-term deals, but um, are still, you know, coming up in the next few years because a lot of them were struck in the early days of the market as you noted. So definitely something we are looking at um also very excited about the launch of the DTC apps. You mentioned. I think it's going to be great for sports viewership. It will help betting. Uh, I think too early to tell, you know what,
Kinds of, you know, media buying or partnership opportunities might present themselves. Obviously, we are anxiously watching, though, and seeing how that stuff unfolds. And, um, if there's a partnership that makes sense, then, you know, we would certainly look into that.
Thank you.
Thank you.
Our next question comes from Robin Farley of UBS. Please go ahead.
Great, thanks. Um, 2 questions 1 is, um, it looks like the first quarter, where you're unique, users on a kind of trailing 12-month basis was flat sequentially. And I don't know if the answer is as simple. As, you know, you you didn't maintain the users that you didn't want to, maybe it's that simple. Um, and then the the second question and Sam are related is um, can you kind of tell us where you are these days with your split of, you know, when we think about the sort of standard 80/20 split that, you know, 20% of customers providing 80% of Revenue? What what is that for? For DraftKings? Just kind of think about the tax implications for the larger players and also you know, thinking about the size of the smaller players that it's aren't as meaningful if you, you know um to your, to your Revenue Outlook. Thanks.
Great. Thank you.
Thank you.
Our next question comes from Brent Monitor of Barclays. Please go ahead.
Um, good morning everybody. Thanks for taking my question. Um, Alan I was hoping. Maybe you could just give us a walk on the 25 2025 ebita. Um, reaffirmation at the midpoint, you know, if you could quantify the tax change, uh the Missouri launch and then if there was, you know, anything more than sport outcomes, um, the good guys side. Um, if you could break that out as well,
I, I think at this,
Point, we're expecting.
Missouri is kind of long.
Um, early early December, um, it'll probably have around 35 million dollars of AA impact this year. Um, I think we've um, 35 to 45, sorry. 35 to 45 million impact this year. Beyond that, the the sport, um, outcomes was the big lever in Q2 that we saw.
Um, but we did see some really strong performance of our core fundamentals of the business not enough that, we'd adjust the guide for necessarily, or create a separate Bridge item, um, but enough to give us some optimism in the back half of the Year. Ultimately, we looked at the guide realized that there was a chance to wiggle a little tiny bit and decided just to keep it Fly. Given that most of our um, revenues needed does come in the last half of the year with the NFL and the NBA. Um, felt really good momentum going into the back half of the year, but don't feel like we need to necessarily lean too heavily into it this early on.
Excellent, thank you.
Thank you. Our next question, comes from Jordan vendor of citizens. Please go ahead.
Everyone, good morning. Thanks for the question. Um maybe a 2-part question for me. First, I'm getting your pregame handle is down year-over-year in the quarter. Should we expect that to grow? Um in the second half? And then more broadly, you've been 1 of the more vocal operators around in play, obviously. And are you seeing any changes to your customer betting patterns size of wallet? Shipping, the wallets just anything you can share their thank you
Yeah, so, I mean, it's hard to say what pregame handle will do because we we really don't even. Look at handle in isolation, we look at all the levers of Revenue and definitely when you have, uh, you know, if we, if you're trying to maximize handle you would pump promo into the market. So, um, you know, in a quarter where we had really strong stronghold rate, we had really efficient promotion. Um, I would expect handle to be a little lighter maybe than in, uh, future quarter of those things weren't the case. So it's, it's hard to sort of say because it depends on outcomes and promo rates and other things that are all moving parts. And we kind of look at that as we have multiple levers to grow our revenue and ultimately, you know, land the plane where we want to, um, so hard to say. But we are very excited about the growth that we're seeing in, in game, as you mentioned, um, we were up about 16%, uh, overall for the quarter and in-game,
Really uh led by baseball, which is up even more. Um, so very excited about that and I think there's a ton of upside there. If you look at the growth that we're seeing and it doesn't seem to be slowing. I think 1 you know it's going to be the source of handle growth for the industry in the next. You know, probably a couple of years and 2 outside of any new states. Of course. Uh and then 2 we are the leader right now and have by far the best offering we had over 90% uptime. Uh, and all of our core live markets last quarter, which is an industry-leading number. So, uh, and and we have a wider offering than anyone else in the industry. So I feel like we're really playing from a position of strength and the area that's likely to be the biggest source of growth for the handle side of of, of the OSB Market in the next few years,
Great, thank you very much.
Thank you.
Our next question.
Ben Miller comments, please. Go ahead.
Great. Thanks for taking the question, just on, on live betting again. Um, as you think about the time, spent in the app or session counts for customers, engaging within play? What are you seeing in terms of, um, around driving better conversion via personalization? Or even getting someone to engage with different matches, or or Sports against those Impressions? And then the second part of that is just, we've talked in the past about live betting, potentially unlocking, new cohorts of customers because of the product offering, just, what are you seeing around around that front as well. Thanks so much.
Yeah. So, you know, I think when it comes to, uh, personalization. We are still really early days of what we think we can do. So, uh, I actually think there's a good bit of upside there and from some of the the the things that we have implemented to date, we are seeing really strong results in terms of Engagement. So I do think there's a lot of upside on that front and sorry, what was the second question? Can you say it 1 more time?
Yeah, just around. Um, the potential for live betting to unlock new cohorts.
Oh, like new acquisition.
1 of the things that's good about.
You can still get a bed in and a lot of people don't know that. So I think as the education around that uh continues, it's going to create more efficient in-game customer acquisition for us and it'll extend the window of, uh, time that we can acquire customers. I'm not sure so much that you're going to get an incremental type of Customer because so much of, you know what people do is similar to pre-match. I mean, they're different bet types but it's the same general activity. Um, but I do think that having a larger window to be able to acquire customers and having the education out there that you can get your bed in any time. Even if the game started already will help
Great. Thanks so much.
Thank you. Our next question comes from Jed Kelly of oppenheim Co in
Great, thanks. Thanks for taking my question. Um, can you speak to any July handle Trends, or or July? Hold Trends. You you, you're seeing and and how the outlook for handle is in the back half of the year and then just just touching back on. I gaming. Can you talk about where you think you are competitively with the I gaming? First player versus the sports book? First customer. Thanks.
So, I think, uh, first on the handle question, uh, you know, a little bit of a different sport calendar. The Copa and Euros were big last year for soccer. So, soccer handle was not as strong, but all the other major sports, uh, handle was up double digits year-over-year, so, you know, baseball basketball, everything, uh, not basketball season baseball, uh, golf, you know, everything else. Combat Sports. Everything was up, uh, double digits year-over-year. Um, and also, we didn't have a Olympics in July, uh, this year we did last year so that, that made a little bit of a difference, too. Um, so some some scheduled differences but all the, the major sports were showing good strong. Uh, double digit handle growth. Uh, and then, you know, your question on IG gaming. I actually think you're right, that that's where the biggest opportunity in the most growth lives. I, I think we are uh, leading the pack as it comes to the Cross sell and conversion of sports book into uh customers into I gaming players and feel like for that reason, we have really done well to own
On the table game space in a big way. Uh, and I think where we have our big opportunities with that Slots Casino first player that we, you know, believe there's many, many more, uh, out there, using competitor apps that we will be able to, you know, provide a great offering and maybe at this point don't think of DraftKings as much uh, as a place that they would go do that and think of us more as a sports brand. So, I think there's a lot of, uh, good stuff on the product side and feel really good about that. Um, and I
I think really, you know, there's a big opportunity to continue to build our brand and, and, and reach that slots first customer
Thank you.
Our next question comes from Ryan, sick doll of Craig helen.com. Please go ahead.
Hey, good morning guys. Um,
Want to focus on Illinois, wager tax. You guys are passing that along as our FanDuel Fanatics uh some of your your main peers and competitors. I guess curious what your assumptions are and how you think about that market and what passing that on. I know it'll be a new experience for the consumer but what you think that'll mean from a market, share standpoint and then also from a in Market Tam standpoint.
So, you know, I I think the short answer is I don't really know because this is unprecedented the way that Illinois implemented, the tax. There really wasn't a good solution here. Um, you know, because if you take low dollar bets, you either charge a pass through or you don't offer them and we did see some other operators choose instead to go with minimum bet sizes. Which you know, I think there's some pros and cons to different approaches, but we felt like this was the best approach. It gave the customer at least an option if they wanted to, you know, still make lower dollar bets even if they did have to pay uh the pass through tax along with it. Um, but again, the way Illinois implemented this, there really isn't a great solution. I'm hoping that they fix it. Um, there's got to be a better way to do it and
Uh, at this point, really hard to say what it's going to do, you know, I don't think it's going to have zero impact, that's for sure. And uh, that was part of what Allan mentioned. We had baked in, as we thought about, you know, the impacts of tax increases in our guidance, looking forward this year. And, um, you know, at the same time, it's really hard to know because we haven't seen a tax like this before per wager tax, so uh, it's kind of Uncharted Territory.
Fair enough. Thanks Jason.
Thank you. Our next question comes from been checkin of. Please go ahead.
Hey, good morning. Um, thanks for taking my question. Anything, you can share on the you helped us with the ibaad guide for Missouri. Um but just
The expectations are on the pace of customer acquisition anything, you're doing differently with this launch. Um should this be faster than the normal uh relative to some of the other metrics you've shared previously? I think in the past you've talked about, you know, kind of like mid single digit percentage of the population in the first um, 90 days. And then any color on CAC, expectations and parallel to this, um,
You may not want to touch it but directionally X jackpot was your external marketing, close close to flat year-over-year.
To the second question. Um, but you know, on the first question, I I think each state we get a little bit better but I would expect Missouri to look largely like last couple of days launches that we did in terms of timing. I do think, uh, for, you know, some reasons that were restrictions and and the last launch in North Carolina from The Regulators, we probably got off to a little bit of a later start than we will in Missouri. Uh, so I think if you look at Missouri, you're going to end up with, you know a little bit maybe more acceleration than that 1. But I think if you look back to the last few launches before that Ohio Massachusetts it'll look more like that. All that said the timing of the year is different too. This is going to be happening uh, right?
In the middle of NFL season. So um, that'll probably change the pace and the curve. Also, I would expect maybe a little bit more of an accelerated curve for that reason too. Um, but overall, I don't think any reason to kind of model out 2 different lead than what you've seen us do in the past in terms of mid single digits. Um maybe there's some upside there and I think the CX will be fantastic because it'll be you know right smack in the middle of NFL MBA will be having all the major sports outside of baseball will be happening. So uh I think you're going to see really good cats.
Thank you.
Our next question, comes from Joe staff or suski Hannah. Please. Go ahead.
Good morning, Jason Allen. Um, wondering if you could talk about your approach for customer acquisition, in third quarter, obviously, uh, seasonal High Point, uh, for that activity. And and just how to how we should think about.
you know, you realizing further promotional efficiencies
and then for my second question.
Just to follow up on on jackpocket with with Texas out of the user base. Just wondering if you could remind us what?
Are the biggest states now, you know, kind of within uh the user base of Jack pocket.
So, on the second question, uh, New York is now, the biggest, uh, New Jersey is fairly large, uh, so those are some of the big ones. Um, but you know, obviously their Jack pockets in, uh, you know, about what 18 states now. So, uh, lot lots of diversification across many states as for your first question on, uh, the, the customer acquisition site. You know, I think as you noted, this is the, uh, 1 of the most important times of the year for us, from a customer acquisition perspective. So, obviously lots of good stuff planned. I feel pretty good about where we're going to be competitively. Uh, I think that we will be more efficient, uh, you know, this year as we continue to, you know, uh, optimized but also, um, we'll have more mature States this year. So I don't know where that's going to net out. Uh, and then obviously we have the Missouri launch coming a little bit later in Q4. So that'll be, uh, something we're gearing up for as well.
Thank you.
Thank you.
Our next question comes from the line of Barry Jonas of Trust Securities. Please go ahead.
Hey, good morning guys. It's it's Patrick Kio on for Barry this morning. Thank you for taking our questions. I have 2 around uh tax mitigation for you first with the Illinois sir charge pending uh could you clarify how that Revenue will be taxed?
and how are you thinking about, possibly rolling out search charges to
Uh, other high tax jurisdictions second, uh, Sports Book. Price has been an interesting topic to us. We're curious how you think about balancing that competitive Dynamic with customer awareness and profit potential does tweaking pricing weigh in as you think about mitigation. Thank you so much.
Next. I think Illinois has taken a little bit of a different, uh, view on it. So um, we're going to try to see resolve that before we uh implement the charge which isn't happening until uh, September 1st, but the intent was to be a pass through. I think if it ends up being treated as taxable Revenue, then there's really no benefit to do that versus incorporating into the pricing. So that is something that we'd have to consider. But right now, I think this is the current plan. And in terms of other states, I think we have to see how this 1 goes. I mean, this will be, uh, a really interesting experiment, uh, to find out, you know what, what the sort of net effects of of implementing such a charge will be and that will give us great data uh upon which to rely as we think about other states that may have a higher tax rates than what we want to do. Their
Thank you.
Our next question comes from the line of Brian pits of BMO Capital markets. Please go ahead.
Good morning. Um, thank you very much for for the question. I actually want to ask about um,
Maybe some of the, the, the micro betting, with reports suggesting New Jersey is pursuing, you know, Banning micro betting really in the context to your live betting, I guess. Now over 50% or total handle that you mentioned, can you help us? Understand how big micro betting component is? And how much risk you think that ban could actually be? Uh, thank you.
I I see that as very, very low likelihood. It was just a piece of legislation put out by somebody. I mean, New Jersey offers online slots. I don't know how they could possibly be looking at micro betting is the the great Scourge. Um, but as far as micro betting in terms of size, it's not that large for us, it's single digit percentage of handle of live handle. I think even as well. So, you know, meaningful, but not something that, you know, I would say is a huge component. Uh, but at the same time, you know, bills get introduced all the time that, uh, you know, don't really I think have much of a chance of advancing and I think this is 1 of them.
Thank you.
Our last question is from Bernie mcternan of Needham and Company. Please go ahead.
Great. Um, thanks for taking the question. Um, just wanted to stay on in play betting and, and given the simple but acquisition closed. The late last year. This will be the first NFL season of of you guys owning the assets. Just wanted to see how you expected to play into your new products. You're bringing to Market this NFL season and how it plays into your expectations for second half handle Trends. Yeah, simple. That's been great for us. I think the team is really Joe with our team and I think a big part really, you know, of why we are leading right now on live, betting has been the addition of their team and their technology that we brought on. So really excited about having them here for a full NFL season. And I think the work that's been put in over the last
Last year is going to show.
This concludes the question and answer session, I will now turn it back to Jason Robbins.
Thank you all for joining us on today's call. We're excited to be well positioned for continued success in the future. Thank you for your continued support.
Thank you for your participation. In today's conference, this concludes the program. You may now disconnect.
Mhm.