DraftKings readies post-California referendum plans as “unfavorable” campaign nears end
Operator ready to “pivot on a dime” if voters back Proposition 27, but multi-million-dollar initiative not expected to sway opinion
DraftKings CEO Jason Robins has distanced the US sportsbook operator from the controversial Proposition 27 campaign in California which aims to widen sports betting to out-of-state operators.
Speaking as part of DraftKings Q3 2022 earnings call, and just ahead of the full state vote on Proposition 27, scheduled to be held in California on November 8, the DraftKings CEO echoed previous admissions that defeat was on the cards for the operator.
“We are still deploying grassroots efforts, but the most recent polling suggests a likely unfavorable outcome for our coalition,” Robins told investors.
“DraftKings has discontinued additional cash investment in the campaign. DraftKings’ 2022 cash investment in California was approximately $17m,” Robins added.
DraftKings was a prominent member of the five-strong operator coalition backing Proposition 27, a group which included FanDuel, BetMGM, Fanatics and PENN Entertainment.
The campaign, which aims to widen sports betting access to external firms while funding homeless causes in the Golden State, has bombarded Californian residents with a slew of advertising and leafleting in an attempt to curry favor.
However, Proposition 27, and its gambling-based tribal operated rival campaign Proposition 26, have both failed to sway the voters, with recent polling results suggesting both will fall short.
Total contributions made by DraftKings to the campaign amounted to $34.3m since its initial launch in June 2021. DraftKings has maintained its financial commitments to the campaign throughout, only giving up on the drive last month.
Much of the firm’s financial planning for 2023, including its ambitious target of being EBITDA profitable by Q4 2023, has been reported with a potential California victory in mind.
Robins was asked by investors during the call what his plans were for the monies deployed in supporting this potential California launch now that results looked to be against the firm’s plans.
“We had a California plan and a non-California plan. Obviously, anything can happen,” Robins said.
“If we all wake up on Tuesday and Wednesday and find out it passed, we’ll give it [potential additional capital] back to the California plan, but it wasn’t the same plan. It wasn’t as simple as saying we tack on California to what we just guided to now.
“There are definitely trade-offs that would have needed to be made and that we were prepared to make if California were to launch,” he added.
The DraftKings CEO continued: “What we’ve continuously said is that we are absolutely committed to controlling our own destiny that we have a clear path to profitability with cushion on the cash balance that we have today and that was irrespective of whether California launched or not.
“Right now, we’re planning on executing it without, since that looks like where it’s going, but we’re ready to pivot on a dime if we get a pleasant surprise, although that’s certainly not what I’m expecting next week,” Robins added.