#3: No, DraftKings Is Not FTX

Kyle: What do you make of this from Rovell? BOLD, COURAGEOUS reporting to expose companies his employer Action Network makes millions in affiliate fees from, or sensationalist headlines looking for the next FTX moment?

Jason: Rovell knows exactly what he is doing. He wants to portray himself as a “journalist” seizing the moment for PR and backlinks. Very few people outside of the affiliate industry conceptualize the money that AN has pulled in from DK.

It’s a worthy story, to be sure, since it looks like a coordinated effort to go after sportsbook user accounts across the industry. But the companies weren’t “hacked.” The users were. Same thing happened with celeb iCloud accounts and Apple a few years ago. DK FD et al doing right by customers, but biggest takeaway for me will be shining a light on the lack of useful customer service. When money is involved, you need a human being to answer the phone. Judging by Twitter comments, books not doing enough there. That said, feel it was totally reckless for that goober Rovell to put “FTX” in the story and tweet. That’s a strained parallel at best, and disingenuous at worst. He seemed proud of eroding $700 million of market cap though.

I VERY much enjoyed DraftKings in their statement blaming third-party bet tracking apps... like, you know, Action Network. This is the type of warfare I'm here for.

In the end all security responsibility falls to DK. I can see how backdoor API’s are a concern, but was surprised to see them called out.

Probably bullshit. Came from UK paper, so this feels a lot like Man U choosing the largest company on Earth as a bidder for leverage. Like us entering into a partnership and me telling you Elon Musk offered me better terms.

Agree, BUT, this seems like a great opportunity for Apple or the market as a whole to test these insane professional sports team valuations.

Apple owning Man U leads me quickly down a NFL Network type approach to soccer for Apple. Owning the rights to one of the largest franchises in a sport has proven to be quite the bargaining chip….. just ask Jerry Jones and Robert Kraft.

While I don’t think it’s real, not crazy that a tech company would or could own a sports team. Apple is a global company and soccer is the global sport. Their biggest entertainment success is with soccer (Ted Lasso), they paid $2.5 billion for MLS rights. Could be the Netflix strategy we wrote about two weeks ago— buy a team, make it first class, then do compelling content about it. Still, Apple is about as focused as it comes and, unlike say a Disney acquisition, you’d have to really reach to explain how this makes any sense.

I cant argue with the focus of the most profitable company on the planet, but I do see avenues for this to be viable for Apple TV+ if they're serious about sports rights.

Sports betting community dying to find a betting thread to the Iger news. But this is the story of horrific streaming spend, the messy switch from value to growth and maybe back to value company, declining CS and parks, and a whole host of stakeholder confidence issues. What Disney does or doesn’t do in sports betting just simply isn't that important for Iger.

I also think the word salad from Chapek about sports betting in the past was someone who had no command of the details just saying words to placate an interviewer.

Iger is responsible for the many pillars of growth and risk taking that built the current beast that is Disney. ESPN not getting involved in sports betting to this point is still shocking. We have given kudos to Michael Rubin for waiting for the “right time”, Disney deserves the same. ESPN’s ability to be the leader in 1 screen viewing/betting feels like something Iger would love to own.

Latest Morgan Stanley report suggests online gambling in US is approaching its “EBITDA” moment, citing DraftKings decreased promotional spend in PA since 2019 and now approaching profitability.

Good to see someone from the financial sector say what we did two weeks ago— DK has data on 3 year profitability. It just becomes a math problem to make sure there is enough cash around for long enough to make sure the industry gets there. It’s the paradox of sports betting! Too fast, run out of steam. Too slow, bad business.