We caught up with DraftKings' co-founder Matt Kalish last week leading up to the PGA Championship. DraftKings has been running "Millionaire Maker" contests for each major since the 2014 Masters, and expects its biggest participation ever for this week's PGA Championship. Kalish explains why golf has been so popular and offers a look into DraftKings' plans for golf in 2016.
__Golf Digest:__Take us inside DraftKings and the level of excitement following the huge investment news recently from mega franchises and companies like the NHL and ESPN.
Kalish: There's definitely an element of staying very focused that we concentrated on in 2012 and 2013 when we were really small and starting out. Making sure we're thinking about the user experience first and what our players want to see and try to deliver on that.
It can be hard to keep that in perspective when we're signing big deals with ESPN or Fox. And some of these opportunities we have, three years ago, I never thought we would have doing DraftKings. It's definitely remarkable and really exciting how fast weve been growing, but what got us here was relentlessly focused on the customer and what they want to play. So trying to deliver on that. Everyone here has to be really focused and humble to make sure we don't lose touch with what got us to this point.
What sorts of things will the $426 million investment money allow the company to do to grow even more and other opportunities?
We have good plans for the capital for sure. Right off the top, is growing all aspects of our platform. We're going to be very aggressive, which we always have been, but on a different level. That aggressiveness will come in growth in the U.S., but in the latter half of this year, we're going to start to dabble in some international markets starting with the U.K. And it's going to be very exciting for us to start that international journey. That's our immediate plans. And I think as a part of that, we'll be focused on expanding our game varieties.
Supporting more sports and leagues that people would like to see in new countries that we're entering. In the world of golf, for example, the PGA Tour is great, but I think, if you're in Europe, you might want to play a European Tour game. And there's a lot more that we can be doing to customize and cater to new markets as we grow. So those are the biggest focus areas this year.
Golf has been hugely popular for you guys -- I've read it's right behind football, basketball and baseball. How popular is it?
It's been strong. Really strong. We started doing golf at a point in time where not a lot of people were playing fantasy golf. There was some, but not much. Really, there was no market of fantasy golf out there. And the team here tried to build it up from scratch, essentially. What I think was helpful was having a good communication line out to our customers and seeing what they wanted to play.
What I think is wonderful about golf is, the setup is perfect for what we do. There are these four mega events every year. Everybody stops what they're doing to pay attention to the Masters and the U.S. Open. And those are the key elements -- building around the Masters and the U.S. Open and those events.
However, it also has this great element of frequency, where every week the best players in the world are showing up and they play. And it continues to engage people every week. And I think we got on a role this year, being focused on the major events and putting out wonderful products for those. And then following through with great product going week-to-week in between the majors.
Yeah, like you said. Fantasy golf was kind of a thing like three years ago. But not nearly the popularity of other sports.
We launched golf in Jan. 2014. About a year and a half into it now. And we started running as fast as we could to get it set up and adopted. That's what we do in general.
When we started this, we believed that the NFL was going to be really popular because season-long fantasy is so popular. And we weren't really sure how effective we'd be able to be at getting people into the other sports like NBA and baseball. And that's a competency that we developed really well over time. Now we can get people to try other sports and get them into it. We've found that, once we get people to try something new, it's very sticky.
The game itself, people fall in love with it, constructing these lineups by using data and numbers-based analysis and their sports knowledge. The sport is almost secondary to the game itself at this point. With golf, even though there wasn't a big market for daily-fantasy golf, or anything, I think we have a good sense of how to get that game in front of people and get them to try it once. From there, the product takes care of itself. It's fun to watch the PGA Tour every week, so I think people just got into a rhythm watching it and have continued playing it.
Would you guys have projected golf being as successful as it has been for you guys, being that there wasn't a market? Looking at all the guaranteed money from the start of this year to now, I think last week, it's really increased dramatically. Did you foresee that?
We knew that it had a lot of potential, but what's happening this year is beyond anything we really could've hoped. The idea of doing the Millionaire Maker for the Masters was a very aggressive move for us. We thought it wasn't going to fill all the way, but it filled early Wednesday before the Masters. It was out of room. Just the magnitude of it. We always had a lot of faith in the weekly product the PGA Tour puts on display every week. It's a great setup for the season and the majors. IT's perfect for us. We definitely expected it to do well but nowhere near this.
I've seen that behind the NFL, NBA and baseball, golf's the most growing sport for DraftKings. Is that accurate, and how has golf helped in general?
I think what it does that's very beneficial, when there's less going on in professional sports, the NFL, NBA and NHL are all in the offseason. It can be a long summer in the daily fantasy world if all you're playing is baseball. One thing we focused heavily on is adding to that experience over the summer, adding golf. But also we added MMA and MLS soccer leagues. We added NASCAR too. This was 100 percent on focused on adding more in over the summer.
Of all the things, golf has definitely been the strongest. It's phenomenal how much golf has grown over the summer. Nothing's growing faster than golf. We're double where we were before the Masters. So it's a rapid growth and has definitely paid off, especially in terms of adding to the summer experience.
It's really fascinating to see how much golf has grown. What do you think makes golf such a success, and what have you seen grow the growth?
Some of the things that make golf stand out is that it's a four day experience. So if you play a $3 tournament, you get four days of excitement for a $3 investment. So that's really good bang for your buck. Think about anything you could do for $3, I think that's just really good value. It's an incredible opportunity for a small buy-in. And obviously that carries the potential of winning thousands of dollars every week.
But really, I think it's just one of the recreational things you can do that creates a great value and experience for somebody. And also think that the PGA Tour has a great product. The beautiful courses. The best golfers in the world. And they compete and it's very competitive.
Every Sunday there are great storylines, like with Jordan Spieth this year. So the storylines are carrying the sport, and I think it all adds up to a sport that a lot of people might not have given it a chance. But now that daily fantasy sports is around, they're trying it out and they've found a new love for it.
Yeah, it has been a great year for golf especially major-wise with Spieth, so that makes sense. You mentioned expanding into the European Tour market for next year. And the major tournaments have been a huge success. So are there other plans to expand the golf offerings for 2016?
Yeah, I think that's definitely going to be what happens. We've grown our prize pools dramatically. The PGA Championship [this week] is 50 percent bigger than the Masters, so there's been more organic growth as more people get into it. And we'll see that continue into the next year.
We're planning on investing a lot of our new round of capital into growing our user base. Trying to increase the amount of stuff going on the site. And as a result, I think everything will lift up some. So you'll see more for the majors and the week-to-week offerings next year, even bigger than they are now.
Are there other areas of growth that DraftKings is targeting in golf?
I think over time, with the growth of users we've seen, the amounts of things we can do in tournaments and different experiences, such as live events for golf, we're sending people to the pro-am in Lake Tahoe to play with the celebrities. All these different things that we're able to layer into the experience comes with overall growth. I think you'll see two- to three-times growth in the amount of experiences we can offer in golf. Prize pools will grow a ton, too."
And also pretty awesome, we're doing the first-ever live world championship of daily fantasy golf. The way it works, people have been qualifying in to win an entry. And at the Deutsche Bank Championship at TPC Boston in September, everyone will come together and attend the golf tournament for those four days. So while they're there, they'll be competing for fantasy golf and following their golfers live. The total prize pool is $600,000, but the coolest part is you'll be right there. As guys are right there finishing up their round, we have some amazing hospitality lined up on 17 and 18 that our players will have access to.
I think it'll be a one-of-a-kind event that we want to go for. It's a new level of access to the sport and it's something money can't buy. I think what we're putting together is really special to allow people to have fun.
That's great. How many spots will there be?
Twenty-five people will win entries. Each week there's been one winner and two for the winners of the majors. We've been running it all season so it's coming to a conclusion now, with a couple more entries open to win at the end of the year before the field is set.
So these are the type of experiences you'll look to expand even more?
For sure. We want to have a complete portfolio of experiences that people on DraftKings can go after on every sport. We go out and actively try to secure those experiences through our partners with teams and leagues that we work with. Our criteria is: We focus on once-in-a-lifetime things that money can't buy. I think that's really the template that people look for and it's what will help us continue to grow in the future.
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