Ladies and gentlemen, thank you for standing by. And welcome to the DraftKings' Q3 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like introduce your host for this conference call Mr. Stanton Dodge. You may begin.

Good morning, everyone, and thanks for joining us today. Statements we make during this call that are not statements of historical facts constitute forward-looking statements that are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. For more information, please refer to the risks, uncertainties, and other factors discussed in our SEC filings. During the call, management will also discuss certain non-GAAP measures, which 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. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our quarterly report on Form 10-Q filed today with the SEC and in our earnings presentation which is available on our website at investors.draftkings.com. Hosting the call today, we have Jason Robins, Co-Founder, Chief Executive Officer, and Chairman of DraftKings, who will share some opening remarks and an update on our business; and Jason Park, Chief Financial Officer of DraftKings who will provide a review of our financials. We will then open up the line to questions. I will now turn the call over to DraftKings’ Co-Founder, Chief Executive Officer and Chairman, Jason Robins.

Good morning, everyone. Before I begin my remarks, in recognition of Veteran’s Day this week, I would like to thank our country's veterans for their sacrifices and service. In order to more directly support our veterans and their families, DraftKings has launched Tech for Heroes in 2018, a companywide initiative that provides veterans and military spouses with free comprehensive high-tech job skills training and connects veterans to DraftKings' employees who provide mentoring. Since launching the Tech for Heroes program, we have invested over a $1 million in providing three accredited training to veterans and their spouses across the country. I'm proud to announce that in 2021 we will be expanding the reach of our Tech for Heroes program and are committed to training approximately 250 veterans in 2021, double the number we trained this year. We want to give veterans and their spouses the tools they need to start a new career in tech or advance in their current position. Everyone at DraftKings is proud to do our part to thank veterans and their families for the sacrifices they make on our behalf. I would also like to thank our investors for their continued support and welcome those investors who joined us with our follow-on equity offering in October. On today's call, we will cover the following topics: First, I want to share some insight into our third quarter accomplishments. Next, I will provide an update on our recent state launches in the pipeline of new states. Third, I will discuss our product and technology investments as well as the migration to our in-house proprietary sports betting technology. Then before turning it over to Jason Park, I will share some insights into our sales and marketing approach and our recent equity offering. DraftKings had a very productive third quarter on…

Thank you, Jason, and good morning, everyone. Before I begin, I want to remind everyone that we will be discussing our results on a combined company pro forma basis to improve comparability as if the business combination had closed on January 1, 2019. Pro forma means that we are including B2B for the 9 months ended September 30th for both 2019 and 2020 rather than just from April 24th through September 30 in 2020. In Q3 2020, we delivered $133 million of revenue, a 42% year-over-year increase. These results were fantastic and would have been roughly $15 million stronger, were if not for the unusually low hold for NFL gains during the first 3 weeks of the season. On a year-to-date basis, we have generated $321 million of pro forma revenue, representing 19% year-over-year growth, which obviously includes several months that were deeply impacted by COVID. Our B2C segment, which represents our U.S. product offerings of Daily Fantasy Sports, Sportsbook and iGaming generated $104 million of revenue in Q3, up 55% compared to the same period in 2019. We launched iGaming in West Virginia and online sports betting in Illinois during the third quarter, and we were live in 7 new states for NFL week 1 versus Q3 2019. These factors, combined with the packed sports calendar were the major drivers of our growth. On a year-to-date basis, our B2C segment has grown 29%. B2C monthly unique payers in the quarter increased 64% year-over-year to $1.02 million. The increase reflects strong unique payer retention and acquisition across DFS, OSB and iGaming. On a year-to-date basis, MUPs have increased 20%. MUPs also grew at an impressive year-over-year rate in October as we continue to realize the positive impact of our external marketing spend. Average revenue per monthly unique payer, or ARPMUP,…

[Operator Instructions] Our first question comes from Michael Graham with Cannacord.

Can you just please talk about your 2021 guidance for a second, and thanks for giving us that? And just maybe at a high level, talk about the relative contribution from MUPs and ARPMUP? And then Jason, did you say that, that only includes state where you're live today. So should we expect that as you can add more states potentially, that could drift higher?

Thanks for the great question. So yes, this only includes -- we have continued to follow a philosophy of only including states where we are either live or have a certain launch date and while we are hopeful that we will be able to add states like Michigan and Virginia next year, we don't know yet. So that's not included. Those states are not included in those numbers. The results were really driven by -- or excuse me, the increased guidance is really driven by the results we've seen in the last quarter. Particularly on the customer acquisition side, which is going to give us more revenue and hopefully continue to have more MUPs as well into next year.

Our next question comes from Ben Chaiken for Credit Suisse.

Ontario seems like a great opportunity. I don't know if you have any color on steps or timing? And then with regard to OSB versus iGaming, not sure if either segment has momentum or if it's an all or nothing dynamic?

So Ontario, for those who are not familiar, added to their budget, a basically allowance for private operators to offer both sports betting and iGaming in the province. Ontario previously had only had a single operator, the province lottery that was operating sportsbook and iGaming, although some have been operating in the grey there for quite some time as well. Ontario is a very large province, it’s Canada's largest province. If it were U.S. state, it would be a top 5 state. DraftKings has been present in Canada, including, of course, Ontario for almost a decade now. So we have a very nice sized user base there. And we think it could be a really great opportunity. As far as timing, I think, similar to some of the other processes you see with U.S. states, it's always not -- not always very clear exactly what the timing of process will be. But we think it was a great step to see Ontario put forth what they did, and we're very hopeful that we'll be able to add both sports betting and iGaming in Ontario sometime next year.

Got you. And just a quick one. Is that something you anticipate needing a partner like most states in the U.S.? Or is it just going to be more similar to maybe how Tennessee is structured [or UK]?

The indications we've been given is it will be a direct license. Obviously, anything could change, but that's what we've been so far told. So that's our expectation that we'd be able to, like Tennessee, obtain our own license. I will say, though, that a lot has been left to the regulator. It was a very sort of brief change in terms of the budget and the law. So a lot is still left up to the discretion of the regulator, including questions like that.

Next question comes from Chad Beynon with Macquarie.

From a product standpoint, on your sports wagers in the quarter, can you kind of help us think about what you’ve learned about your database, meaning are your customers skewing more towards football than what you were originally thinking just because of the DFS or were there any surprises just in terms of kind of how the proportions split out with different sports?

Great question. One of the challenges in even answering that is the sports schedule itself has been so strange this year. So looking at things like year-over-year comparisons or even comparing sport to sport has been challenging to draw conclusions from. From what we can see, the balance of sports is quite similar to what we've seen in the past and less in sports betting skewed towards NFL than in daily fantasy sports. However, NFL is definitely the largest sport both in daily fantasy sports and sports betting. It's just the gap is a little bit smaller. In part because things like college sports make up a little bit more of the room on sports betting, and they're not as popular on the daily fantasy sports side. But really tough to tell if anything has kind of changed this year as more states have done sports betting from what we can tell happened, but that's what the caveat there. Typically when we look at things, we look at year-over-year comparison to control for seasonality, and that obviously was not very possible this year.

Okay. Great. And then can you elaborate a little bit more on the ESPN sportsbook link-out, the timing of that and when the full integration will be in place?

Yes, we're very excited about that. We have a great relationship with ESPN, Disney continues to be one of our largest shareholders. So, we think there's a great long-term relationship that we hope to build upon there. As far as timing of any individual features, we plan to announce anything that we do want to announce, in sort of our normal course as things roll out. So we don't have at this time anything that we’re publicly saying about timing of any sort of direct integrations or other things, but teams are working very hard on it. So we hopefully will start to see some of the things very soon.

Our next question comes from Kevin Rippey with Evercore ISI.

I just had one on sort of marketing spend and the efficiencies you're seeing there. Looks like, marketing spend per MUP addition came down quite a bit. I am wondering if you could help us parse out how much of that comes by way of pent-up demand, given the unique sports calendar and how much of it is coming by way of internal efficiencies that you're driving? Thanks.

That's a great question. That is a million dollar question that I don't know that I do have an answer for you. It's hard to quantify how much pent up demand is driving increased response, how much the stay at home nature of COVID is driving increased response, how much the overlap in fourth calendar is affecting thing. All those are new data points for us. So very tough to compare to other periods. Overall, we're seeing great performance, the efficiency, the CAC is actually better than what we expected. And we were able to spend deeper at a lower CAC. So while it's hard to pinpoint exactly how much is sort of [relic] -- or not [relic] but a function of the current environment versus just better optimization. While that's tough to tell, we do know it's better. And I'm certain it's some combination that’s just hard to kind of parse apart how much of each. But the team is always optimizing the marketing. So I would always expect continued improvement. And then also, we're getting close. We're not quite there yet. But we're getting close to that 30% plus level of population having -- of U.S. population having sports betting, which then will allow those national marketing efficiencies to start to kick in. And I think that's part of why you're seeing us start to do some of these more national media deals.

Next question comes from Stephen Grambling with Goldman Sachs.

Hey, this is Stephen Grambling. I guess one just following up on the ESPN deal. And maybe I missed this. But are there any potential implications as you think about the impact to customer acquisition costs. And then also, if you can just touch on more broadly how you think about content and media as a future area of growth?

So, our expectation, when we do any strategic deal is that it will have a positive effect on our customer acquisition costs. And the true win-win is when you're able to actually spend more at better efficiencies that benefits both the media company that's on the other side of the deal, as well as us. And I think the ESPN deal is a perfect example of that where they're allowing us access to inventory like link-outs and integrations that normally you can't buy on the open market. And those are very high performing from past experience that we've had in similar deals, as well as deals we've done on the daily fantasy side with ESPN in the past. So we have a high degree of confidence that this is a win-win deal that should improve our customer acquisition efficiency over time. And certainly we're excited about partnering with ESPN as well as other great media partners like Turner that we form relationships with over the last quarter.

Great. Maybe one quick follow-up on marketing and promotion, can you remind us of where you're kind of targeting the win rate? And does your flexible marketing approach try to manage around that?

Sorry, can you repeat the question one more time?

It's a question on marketing and promotions and where you kind of target win rate. And does your flexible marketing and promotion approach effectively enable you to manage around that. So should we be generally thinking that the win rate if it's higher, maybe you promote a little more? And if lower, promote a little bit less?

It's a great question. I think, in effect, it sort of works that way. It's not exactly how we manage it. We look at promotion much like external marketing, based on an LTV analysis and the cost on the other side. And we look at whether we think that whatever value we're generating on an MPV basis exceeds whatever costs the promotion has, and that's quite very similarly, like our external media to new customer promotions, as well as promotions designed to reactivate or generate new sport play and things like that. I think the effect though, just, practically is similar probably to what you're saying, because promotions will certainly work better in times where maybe the company is holding more and players are seeing less wins come forth versus in times where they're winning a lot. But that's not really the driving force behind how we manage it. That's just more of kind of a correlated output.

Our next question comes from Jack Kelly with Oppenheimer.

Just a couple. Can you sort of share how October is trending right now relative to your overall guidance? And then just with Illinois, you immediately launched there. You put some promotions. Is that state now starting to move the needle in revenue wise, or is it still not as much with some of the promotions? And then I have a follow-up.

So the first -- I got Illinois, what was the first question again?

Just how is October trending relative to your overall 4Q guidance?

You know, we haven't really said much about October, but as you see, we raised our Q4 guidance. So, prior to today, we had been guiding to a midpoint that would represent 22% year-over-year growth, we're now guiding to a midpoint that will represent 40% year-over-year growth. So fairly substantial increase to the Q4 guidance. So without commenting specifically on October, I can tell you, we feel very good about the way Q4 is trending. And as far as Illinois goes, Illinois has now become our second largest state by handle behind New Jersey. It's also our fastest growing state. So we're pretty excited about it. I think you'll start to see some contribution on the revenue side in Q4. Usually the first couple months of a new state launch, we don't see a whole lot of contribution on the revenue side. Tennessee is a great example of that, where we just launched Tennessee, but we don't actually expect it to have a ton of any impact on revenue this year. Illinois, I think, will start to have some impact on Q4. And that is part of why we think that we're going to be better than where we thought we were previously in Q4 this year.

And then just a longer term question for you, Jason. You mentioned product development, on your integration with SBTech. And as we try to get into next year, what do you think is ultimately going to drive the customer stickiness in this industry? Is it going to be more product development, where you can actually generate or drive product differentiation among live betting? Or is it going to be more CRM management where you know how to manage the customer, provide them bonuses. Just how do you see long-term stickiness with the consumer?

Well, we definitely try to have best-in-class product and CRM programs. We have a great data science team. And a lot of what we do is model driven. But I think if you want to kind of simplify it, we believe that promotions drive trial and activation, product drives long-term stickiness and monetization. And I think really, we feel that it's also a stage of the industry thing, we are just starting, haven't even you know migrated yet. We are just starting to put those investments behind building out that live betting and new forms of teasers prop and other things that you're going to see us develop in the coming years. And so I also think as the industry progresses, and we have more time and more energy that we have been able to put behind that, we feel we'll be able to put more and more distance between our product and customer experience. And what else is out there and I think that will increase the effect of that on stickiness over time. Right now, it's very much so many new states opening up, it’s customer acquisition mode for everybody. And that's an important part of it, too. But people we believe will ultimately stick with the best experience. And that's what we're working hard to build.

Our next question comes from Thomas Allen with Morgan Stanley.

There's a lot of investor focus on gross to net win margins and concerns that there'll be impaired long-term, because of how competitive the market is right now. Can you discuss your thoughts on the topic?

Yes. I mean, we're two years into the industry. Just to put in perspective, we had exactly two states, New Jersey and West Virginia live, it started last NFL season, we're in 10 states now. So, I think the long-term margins and other aspects of the industry are going to shake out over time. And we saw this in DFS. So it doesn't surprise me that those questions are coming up in the early days of daily fantasy sports. We ran at much lower margins than what we did longer term, and it ended up, once we move to more of the harvesting stage pretty quick, being a pretty easy change. And then the last point I make is the margins are actually pretty good right now. Even when you factor in a lot of the promotional activity and free bet, that all comes out of our net revenue and net revenue is up significantly, 42% in Q3, we’re guiding to 40% growth in Q4, 45% growth next year. So, if there is any upside on the margin, it should be on top of what is already a very healthy growing net revenue number.

And just a follow up on the similar topic. Where are you in terms of profitability in the more mature markets?

We are planning. So more mature markets are really New Jersey and West Virginia, those are the only two that we weren't even presence last year at the start of NFL. So, we had in the past, right, some projections, multi-year projections on New Jersey, obviously COVID, do things for a loop. But we actually think we're in a pretty similar spot to where we had hoped to be. That said, we still have another month and a half of the year. So what we're planning to do is in our next earnings call in Q1 we will provide an update on New Jersey specifically. And we'll talk about how that's tracking versus what we have previously talked about.

Our next question comes from Shaun Kelley with Bank of America.

Hi, good morning, everyone. Jason, just to follow up on that last question about the promotional piece, just should we think about modeling this a lot like the way -- the cadence or the way that external marketing spend work? So, obviously, as you're in the early phases of launch, those numbers are going to accelerate a lot and then it comes down over time. Or will the promotional piece -- and I'm really thinking about this net versus gross, will that actually come down faster, just given that it really applies more to sort of initial bonusing, like you said activation?

I think that they really wish I thought of that, that’s a great way to describe it. It's very correlated to the acquisition. Certainly, some promotions are aimed at activation, or getting people to try new sports or new products, but the bulk of the promotional dollars are aimed at acquisition. So as acquisition in any given state becomes less of a focus and even if we do continue to spend there, just as kind of we build our user base, naturally, new customers will be a smaller percentage of the total user base, absolutely we would expect promotional dollars to follow a similar trend. And it's really, as you kind of alluded to a new repeat mix thing that's driving it, it's not us deliberately doing anything differently. Obviously, if we see things in the data that suggest something is not working, or working, we will alter. But even if that doesn't happen, just the simple shift between new customers being a very high percentage of our current actives, and eventually repeat being a much higher percentage for new sportsbook states, that will obviously change the promotional dollars, as well as the external marketing spend.

Very helpful. And then just as a follow up, into these more mature markets, really it’s pretty much probably a case study around New Jersey. Are you seeing any change in retention rates one direction or another? How is this all kind of -- how is the cohort trend like working relative to the some of the guidance, ands initial changes that you laid out, call it, back in March in April?

We're seeing positive news on retention across the board, virtually every state that we were present in last year, again, with the caveat that it was a small number for sportsbook, we're seeing growth, New Jersey is way up year-over-year, even just the Masters which yesterday started New Jersey had a 181% increase in handle year-over-year for the Masters. So really tremendous growth in existing states and retention has been strong. Some of that might be due to COVID and people staying home and so many sports on the calendar. But a lot of it I think is also due to us having optimized for -- having another year to optimize our CRM efforts.

Our next question comes from Vasily Karasyov with Cannonball Research.

Thank you. Good morning. So back early this year at the Analyst Day, you argued that a good proxy for us to model stays that you're rolling out and as New Jersey and that the revenue and gross profit and marketing spend index to 1% of the population should be more or less similar. So I was wondering if you could give us an update of if that is holding true right now in the states for comparable period -- compared to comparable period in New Jersey. And if it's still a good assumption, on average going forward? And if not, whether it's you think driven by big sports calendar, or it's just something systemic there?

I think you mentioned the sports calendar, it's hard to compare this year. This has been such an unusual year. And we had only two states, New Jersey and West Virginia live at the start of last NFL, so most of the data we have is from a COVID impacted 2020. And really tough, I think, there's a difference, obviously in New Jersey, and that it had iGaming, so some of the states that had sports betting only that fell off of cliff I Q2. Very different story in New Jersey, where iGaming was still there to carry a lot of the weight during that period. So very hard to compare. We're planning if we can, and we're certainly working hard analytically to do so to have a more definitive viewpoint on that at our next Analyst Day, which will be in Q1 of next year. So hopefully, we'll have enough data and enough things sort of back to, I guess normal as far as you can call anything normal, to be able to do that. But right now, we don't feel that we have enough data to really be able to compare state to state effectively. And we don't want to put anything out there that we're not very confident in.

Our next question comes from Brad Erickson with Needham & Company.

Can you just talk about the relative profitability levels you expect between sports betting and iGaming, and if they're different? And then I guess just philosophically, when you're looking at your P&L for iGaming next to sports betting in a particular state, you run them together more or less, given the cross sell synergies that they can drive and see where it's kind of less about one or the other being more profitable or they’re just looked at separately, just maybe talk about your philosophy on that?

We look at everything together. So, we view it as we have a platform, the user has an account and a wallet. And we want to maximize the amount of value that we can generate over the lifetime of that user. And we direct the team to do that in whatever way the data is suggesting is going to accomplish that goal. So in doing so, we don't really view product level economics as something that's relevant to how we analyze. There are some things, that you can attribute directly to a particular product, but a lot of things like promotion dollars, marketing spend, things like that are very hard to attribute to a particular product. And we don't want to unnecessarily and falsely attribute it to one or the other and make something look misleading or different that really isn't at all representative of how we think about it internally. If you take only the things that you can directly attribute to sports betting and iGaming and take some of those other things out, the product actually have almost identical margins. I think there could be some evidence growing that iGaming might be a larger TAM ultimately. But I don't think aside from that, there'll be a difference in profitability, at least in the things that you can directly attribute to each product, which of course is not the entire P&L.

And then maybe just a follow up if I can. I recognize most sports betting and iGaming are huge contributors to the growth right now. Can you just talk about DFS, and just what the growth trajectory looks like there? And sort of any sort of help on magnitudes we're seeing both in the results as well as the outlook for DFS growth?

Yes, DFS has had a great year. Obviously COVID impacted the sports calendar. So Q2, we didn't see as much DFS activity as we typically do. But it really came roaring back in Q3. In particular, the August and September timeframes after NBA, NHL and, of course, eventually, college football and professional football became live. Just as an example, the Masters was up way year -- way up year-over-year for DFS. And right now, the team is trying to kind of parse apart how much of that is true growth. And how much of that is the Masters came on a different -- in a different part of the calendar this year. And oftentimes, what we see is when we have more activity, everything goes up. It's interesting, because a lot of people would ask us not to deviate from your question, but it's related a lot of people would ask that, hey do you expect iGaming just really grew in Q2, because there weren't a lot of sports and is it going to go down in Q3 and it's actually been the opposite, because we've had more activity on the platform that just lift everything. So DFS, I think, similarly, when you have so much sporting event overlap, like the Masters, for example, and this part of the NFL season. I'm not surprised we saw growth. So the team is working now to try to parse apart how much of that is natural growth that we feel will continue into future years and how much of it is really a function of just a very unique sports calendar this year.

Next question comes from David Katz with Jefferies.

I wanted to ask about in-game wagering in sports. And I hope you can accept the sport references. But what inning would you say that we're in, one, in terms of educating your customer base and in terms of the breadth of offering that you're at today and where you expect to be? And are there any particular interesting learning so far with NFL season to-date?

Continuing with your sports analogy, based on analogy, I think we’re in spring training. I don't think we're even in the first inning yet, it is super early. We have not even rolled out a lot of what we are developing on our own platform, because we haven't migrated over to our owned and operated platform yet. So there's a lot, it's going to take years to build. And then it'll obviously, also be alongside just the customers naturally, finding in game. But the two things will work in together, as the product offering improves, more customers will adopt it. But I think even if you just froze the product offering as is, you'd see more adoption over time as well. So both those things we think will have a very positive effect on each other and create a flywheel that will increase adoption of in-game betting at a rapid pace, once we're able to migrate over to our own platform.

And if you don't mind, I'd like to follow that up which is, do you expect or do you have any intelligence about the degree to which that brings new players in or expands wallets on existing players or some combination thereof. Just I guess prevent me from getting carried away -- prevent us from getting carried away as to how big -- how it ultimately could be?

I think it'll have a combination -- you'll see a combination of both of those things, and there's other parts of the ecosystem that will affect that too. Our hope is that the sports leagues become increasingly comfortable with integrating some little prospects and in-game bets into their actual sports broadcast. And it's more things like that. You see ESPN effect that makes these things mainstream. The more adoption that you'll see and more that will have an effect on new customers. I am very confident that it's an increased retention and monetization play. And I think that can have an impact on new customers as well. But a lot of that will depend on to what degree the rest of the ecosystem evolves alongside and how quickly that happens.

Our next question comes from Mike Hickey with Benchmark Company.

Just I guess -- I think I was just curious if you could I guess just pull back a layer on Tennessee, they had a sort of a rather [barbaric] 10% hold mandate within their regulatory construct. So I'm just curious if how that sort of shapes your success or not in that market and sort of moving over players from that market? I'm guessing you have some workarounds there. And then related when you look at Michigan and Virginia, and you get a sense of the regulatory construct, how much cleaner is that for players and operators and what you've seen in Tennessee? And then I have follow up. Thanks.

Yes. Tennessee will be an interesting one because I think our ingoing belief is that by having higher mandated hold percentage it will be harder, as you noted, to compete with the illegal market and we might not see as much adoption, therefore. And we’ve factored that into our numbers next year. We are assuming Tennessee, for that reason, doesn't perform as well as it otherwise would have, as a comparison to states that don't have that. That said, it could go the other way. It could be because there is an increased hold percentage. It could be that, that enough to offset whatever drop you see in adoption and migration from the illegal market. And we just don't know. So it will be an interesting experiment and like I said, our ingoing view is that it will have a negative effect, and that's why we've assumed that in our numbers for next year. But it could go the other way, and we'll have to see and I think that's one of the interesting aspects of this industry it's going state by state, different states are going to try different models. They're going to have different mixes of products. And our belief is that, that will lead to much faster and much more obvious determination of what the optimal model is, and it will lead to other states kind of gravitating in that direction. And certainly, I think, Virginia and Michigan are more approaching it the way that other states across the U.S. have done. But I'm actually kind of excited that Tennessee is, we love to test here. We love data. So it's an opportunity that we have to see how a different model could work and use that to inform what we think is appropriate going forward.

Nice. The second one for me. Just an update, if you would, maybe on the SBTech integration. I think you launched the app, your app in Ireland in combination with SBTech is sort of a test market, if I remember that correctly. Curious sort of how that's unfolding for you? And I know your deal with Kambi, I think, is the third quarter '21, but when you look at new markets, coming live here hopefully early ‘21, Michigan, Virginia, sort of at the moment now you think you could launch in those markets with SBTech versus Kambi?

So everything is on track. We have previously said that we believe we will migrate in the second half of next year. And as you noted, our Kambi contract goes through end of September. So as of now, we are still feeling good about committing to that timeline. There might be an opportunity to accelerate it, and we'd certainly look at that. And that's been kind of leading to your question on Michigan, Virginia. It really depends on the timing of those. If they launch early next year as expected, I would expect that we will utilize Kambi. If they launch much later in the year, then it might be that we go on the platform that we now own and operate the SBTech platform. So we'll just have to see what the timing is on that, but we do feel like we continue to be on track for our migration commitment through the second half of next year, and we feel very good about either being able to meet that or exceed that expectation.

Our last question comes from Carlo Santarelli with Deutsche Bank.

Acknowledging there's a lot of ambiguity in the outlook, but the $750 million to $850 million revenue guidance, can you guys talk a little bit about kind of what defines the end post of that guidance and kind of what are some of the key things that were pushing towards the high end and/or towards the lower end, acknowledging that states like Michigan and Virginia are not in there at this point?

Yes. So you hit an important point. It is not any assumption around any new states, that's all upside. So that isn't it. I think it's just us being generally still at an early stage of this industry. We have several states that we've only recently launched. There are things like right now, Illinois has -- the governor has temporarily suspended a requirement to register in-person casino, that is taken Illinois from barely a market that registers for us to our second largest market behind New Jersey and our fastest growing. So I think pretty big deal, whether that continues to be extended for several months, and that could have a significant impact on our customer acquisition, and therefore, on our revenue for next year. So it's really a function of just some of those types of variables. And just being so new in so many states and not having the confidence in the precision yet to be able to pinpoint a type of range.

Great, Jason. If I could just ask one follow-up. As it pertains to your customer acquisition, one thing that I think has stood out with you guys relative to peers has been kin of your aggressiveness towards the higher end, more of VIP type of sports betting customers specifically. Have you seen any of your peer start to change their strategy at all around kind of seeking that type of action or those types of players, especially in some of the newer markets, like in Illinois, for example?

I think right now, we're seeing a pretty competitive market overall, and that includes the VIP, higher end segment of customers. I appreciate you saying that we're doing a good job there. I think a lot of that comes from having very strong analytics and discipline around using that data to make determinations on where we invest and where we don't. And I don't necessarily think we're being that much more aggressive than any competitors. I think we're just hopefully being a little bit smarter about where we choose to push and where we don't. And as we get more data, we should get better and better at that. And we feel like time is our friend, and we should be able to widen that, much the same as we feel like we should be able to continually put distance between ourselves and the competitors on the actual experience we can give those customers once they do join the platform.

Ladies and gentlemen, this does conclude the Q&A portion of today's conference. I'd like to turn the call back to Jason Robins for any closing remarks.

Thank you all for joining us on today's call. We really appreciate your insightful questions and look forward to continuing our conversations with you. At DraftKings, we are excited about the future. We continue to build the quintessential sports brand and align with well-known media organizations, such as ESPN and Turner Sports as well as many major professional sports leagues and iconic franchises. We are well positioned with a strong debt-free balance sheet to capitalize on unique customer acquisition opportunities, enter new states as soon as practicable, drive continued product innovation to stay ahead of the competition and explore opportunistic and accretive M&A. I hope all of you stay safe and well, and we look forward to speaking with everyone again soon. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.