FanDuel CEO on Sports Gambling’s Big Boom – The Journal. – WSJ Podcasts – The Wall Street Journal

Posted: June 11, 2022 at 2:07 am

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Kate Linebaugh: If you've been watching the NBA playoffs, you've probably heard an ad like this one.

Charles Barkley: Let's say you win the first game of your parlay, and you're not sure about bet number two.

Speaker 3: Hey, come on, man.

Kate Linebaugh: That's NBA legend, Charles Barkley, doing an ad for the sports betting company, FanDuel, one of several online gambling companies sports fans use to place bets

Charles Barkley: With FanDuel, you can cash out right there and then, and let the voice in your head think about something else.

Speaker 3: Hey, what would you rather have?

Kate Linebaugh: The online sports betting industry is growing quickly, so quickly that sports networks like ESPN have even created entire shows around it.

Doug Kezirian: Welcome into Daily Wager. I am Doug Kezirian. We'll be with you for the next hour right here on ESPN News and we'll bring you the latest developments in the betting world, roster changes, line moves, analysis.

Kate Linebaugh: More than a dozen states have legalized online sports betting in the last few years. And that's because in 2018, the Supreme Court repealed something called PASPA.

Amy Howe: It was the Professional Amateur Sports Protection Act and effectively what it said is that there was a federal ban on online sports betting, and in 2018, the Supreme Court repealed that and they said each state can decide if they want to legalize online mobile sports betting.

Kate Linebaugh: That's Amy Howe, the CEO of FanDuel. She took over the company last year and it's a job that comes with a lot of challenges. There are concerns that companies like FanDuel could fuel gambling addiction. And some fans think that being able to place bets from your phone is changing how we watch sports entirely.I spoke with Amy Howe about these issues and how her company is trying to make sports betting mainstream. Welcome to The Journal, our show about money, business, and power. I'm Kate Linebaugh. It's Tuesday, June 7th. Coming up on the show, FanDuel's CEO on how to win big in the changing landscape of legal sports gambling. All right. So let's dig in with the tough questions. What's your favorite sport to watch?

Amy Howe: For me, personally, I think football. Partly because my boys are so into it, but I grew up in Buffalo, New York. I'm a huge Buffalo Bills-

Kate Linebaugh: Oh man.

Amy Howe: -fan.

Kate Linebaugh: No way. I grew up in Rochester.

Amy Howe: Oh, you did?

Kate Linebaugh: Yes. Yeah.

Amy Howe: So, so we must have that same bond, and I don't know if you were as devastated as I was when the Bills lost to the Kansas City Chiefs this year, but-

Kate Linebaugh: Weren't they robbed?

Amy Howe: Yeah, they were. And you know they changed the overtime rule after that.

Kate Linebaugh: Yes, I do.

Amy Howe: Yeah.

Kate Linebaugh: What about the NBA finals? Who's your money on? The Celtics or the Warriors?

Amy Howe: Oh, I'd like to see, as much as the fact that I live in the state of California, I'd kind of like to see the Celtics win.

Kate Linebaugh: Old school?

Amy Howe: Little bit.

Kate Linebaugh: Okay.

Amy Howe: Little bit. Yeah.

Kate Linebaugh: Yeah, yeah. Amy joined FanDuel in February last year. She came over from Ticketmaster.But, sort of like cigarettes or alcohol, gambling is traditionally considered a vice. How did you think about that as you went into this job?

Amy Howe: I think the way I thought about it was gambling is happening already. It's been happening for decades, whether we want to admit it or not. There's a massive illegal black market out there. And so, I knew the trends from a regulatory perspective. I felt like I could bring all the pattern recognition and history that I had from Ticketmaster, but also really help lead the industry and our company in a way that contributes to the viability of the business longer term.

Kate Linebaugh: States are legalizing gambling, but it's not widespread yet. What are the challenges in navigating this nascent regulatory landscape?

Amy Howe: I mean, first of all, from the outside you may think it's a very organic process for states to legalize. I can tell you it's not as straightforward as it looks. We have a regulatory team that's working state by state with a number of different-

Kate Linebaugh: Lobbying.

Amy Howe: Lobbying, that's exactly right. So we were able to use a lot of those lobbyists and a lot of that pattern recognition when PASPA was repealed to help open up the states. But there's no single state that looks the same. The path to legalizing in New Jersey is very different than Connecticut versus Arizona. And so there's a lot of art and science in how you do that. I think at the end of the day comes down to a couple of core arguments, which is by legalizing, we're doing two things. You're protecting consumers from illicit operators who don't have the same standards that I do as the operator of FanDuel, but you're also economically benefiting the states. All of that money would be going to illicit operators. So the arguments are quite compelling, but the path to get there can look very different state by state.

Kate Linebaugh: Do you think there are some states that won't ever pass it?

Amy Howe: Yeah, I think it's going to be, well, if you're asking are we going to see a world where all 50 states legalize? I think that's going to be a very long time. You and I may not see that. I think that there's still a tremendous amount of momentum, so we're not even close to seeing the headway that we ultimately will see, but I think it's going to be a long time before you see all 50 states legalize.

Kate Linebaugh: And one of the reasons some states resist legalizing has to do with worries around gambling addiction. How do you respond to concerns that FanDuel and your competitors are fueling more addictive behavior?

Amy Howe: Yeah, it's a great question. And listen, Kate, I am so proud of what we're doing on this front. And I'll tell you as right now as the number one mobile gaming operator, it is by far one of the most important priorities. But if you look at my organization, I have a risk and compliance team of well over 150 people that are just focused on monitoring risky play and making sure we're not seeing any abuse around anti-money laundering. But most importantly, there's a lot of what we're doing around how we build our tools and products to let consumers set wager limits and deposit limits, and if they're really struggling to block some of these sites, so tons of investments, and it's endemic to what we do.

Kate Linebaugh: But isn't that a tension? Like part of your business is fueled by the addictive quality to it, by the excitement of winning. And yet you're also being called on to turn that off for some people. Can you talk about balancing that tension?

Amy Howe: Yeah. I mean, listen, we don't think of it as fueling addictive personalities. What we think of it is as if you look at a consumer data on this, 90% of consumers view betting as a form of entertainment. They view it and they do it because if you take sports betting as an example, it enhances the experience. When you're engaged in the, not just the outcome of the event, but take the Super Bowl. We had Pat McAfee had a four leg, same game, parlay. We had a quarter of a million users that were quote unquote riding along on that same game parlay. So it just makes the overall event more interesting. So it's not about fueling addictive behavior. It's about making sure that we can deliver a great entertaining experience, but keep it within your limits. And every consumer has different limits based on both their own preferences and their profile.

Kate Linebaugh: And how do you think about minors in particular? Managing concerns that legal online gambling could introduce more young people to gambling at a young age.

Amy Howe: There's a few things that we're do. Some we have to do. All customers provide Social Security number, date of birth, and our system effectively matches that data up against a third party to fully verify that individual before they're ever allowed to place a bet legally. So that's the first thing. And I will tell you, I mean, I look at the data all the time, but there are a lot of consumers that never make it all the way through that process. So it's important for everybody to know that. And I think a lot of that is not well understood.And then, the other thing we are very cautious of is we don't want FanDuel to be promoting college sports in the sense that I don't want, obviously we take bets on college basketball and college football, but I don't want a FanDuel logo to be showing up on a college football jersey or a basketball jersey. There's certain lines that we will draw around how we promote our brand that I think are important, at least for our company, in terms of how we want to position our brand in the marketplace.

Kate Linebaugh: Coming up, FanDuel's CEO answers the question, does the house always win?Something that you've been outspoken about is trying to bring more women into online sports gambling. Why is that important to you?

Amy Howe: Yeah, well, listen, this is something that I felt strongly about at Ticketmaster and I go back to when I went to one of my very first sports industry events and I walked into the conference room and it was literally a sea of men, a sea of white men, mostly, but it was a sea of men. And I thought to myself, "Gosh, we have a lot of work to do as an industry around not just gender diversity, but diversity in general."And so part of why I'm so passionate about advocating for women in sports betting is for a couple of reasons. One is, if you look at the data, almost 50% of sports fans are women. It's not that women don't like sports. It's just that so far, we haven't made it that accessible to women. Somewhere between 15 to 20% of sports betters are women. And so you just look at that, inherently you know there's an opportunity there.

Kate Linebaugh: But it can also be dangerous. Like how do you think about exposing new demographics to gambling?

Amy Howe: Well, we have objectives. It doesn't matter what your demographic is, in the first 30 days of having a new customer on our platform, where we have to reach you with certain responsible gaming messaging, introduce you to the tools we have, and so part of there's three metrics that our organization is held accountable to. And one of them is how we think about new users on the platform, so it doesn't matter if you're a male or a female or a 21 year old or a 50 year old. We have to expose you to some of this messaging and training early on.

Kate Linebaugh: How are you trying to get more women into sports gambling?

Amy Howe: It's a great question. And, listen, I think the word trying is important, because there is an element of experimentation and test and learn. We were actually one of the first to take bets on women's March Madness, couple years ago. And this year we saw there were well over a million bets placed on women's March Madness, which is a big movement from the previous year. So I think part of it is we are sponsoring those organizations and trying to advocate for those athletes.In terms of how we reach the female audience there's a couple things that we're experimenting with. One is we created a product, it was actually a fantasy sports product with a gist where it was for women by women, and as I said, it was kind of this community aspect to it.

Kate Linebaugh: Was it pink?

Amy Howe: No, it wasn't pink.

Kate Linebaugh: Oh, good.

Amy Howe: Good Lord. So we were trying to tap into that insight that if you bring women together in a community and leverage a product that is consumable for them. So that was kind of an interesting experiment.

Kate Linebaugh: How do you think about how the ability to legally bet on sports is changing sports?

Amy Howe: Yeah. It's changing it quite a bit. If you look at, we did some research with our NFL and NBA consumers in particular, and those users are 75 to 80% more likely to watch the game if they're betting on the game as well. And, again, it's not just about who's going to win, what's the over/under, but it's the engagement during the event itself, it's betting on the parlay and same game parlay products that just makes it much more engaging. It's changing live sports in a way that you wouldn't have seen a few years ago and it's legitimizing it. When you have the biggest leagues in the world, the NFL, the NBA, that are partnering up with us in figuring out how they use sports betting to enhance and evolve their product, it's become a part of mainstream sports and culture. It's fun to see just how quickly that part is changing.

Kate Linebaugh: But the thing that non-gamblers like myself think is that the house always wins.

Amy Howe: That's not true. If that were true, we wouldn't have many consumers back. No, in fact, there are many weeks where, listen, we joke about it, but we call them punter friendly weeks. There are many weeks where we may lose quite a bit of money because the consumers won. And we want that. We want consumers engaged. But if you're constantly coming to a sports betting platform and you lose every time, that's not a very gratifying experience either.

Kate Linebaugh: Right. But I thought the whole thing is like you can win a little, you can win a little, you got to let some people win, but overall you need results.

Amy Howe: Well, but even though we have lots of great data and models and pattern recognition around how the lines are set and what the odds are for any given bet. You're a sports fan. You watch things. And there's a lot of very unpredictable things that happen in the sports world.

Kate Linebaugh: Let's talk about the Kentucky Derby.

Amy Howe: Yeah.

Kate Linebaugh: Rich Strike. How was that for FanDuel?

Amy Howe: That was a good week for consumers.

Kate Linebaugh: Okay.

Amy Howe: No, but those are the stories you love. I mean, that's part of, we always talk about sporting events being these unforgettable moments. But even if you're not an avid horse racing fan, people remember those moments.

Kate Linebaugh: They do. And I watched the Kentucky Derby a lot, and I don't remember most of them, but I remember this year's.

Amy Howe: Yeah, yeah. Exactly.

Kate Linebaugh: All right. Well, Amy, thank you so much for joining us.

Amy Howe: Thank you. Enjoyed talking.

Kate Linebaugh: That's all for today, Tuesday, June 7th. The Journal is a co-production of Gimlet and The Wall Street Journal. Thanks to Katherine Sayre for her help with today's episode. Thanks for listening. See you tomorrow.

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FanDuel CEO on Sports Gambling's Big Boom - The Journal. - WSJ Podcasts - The Wall Street Journal

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