From the heart of where innovation, money and power collive in Silicon Valley and beyond. This is Bloomberg Technology with Emily Jay and this is Bloomberg Technology coming up in the next hour. Jewel ordered to pay almost four hundred forty million dollars to settle a probe over the e cigarette makers marketing to teens, but the company still faces hundreds of lawsuits plus the rise of the creator economy.
We're gonna take a deep dive into this booming industry and how YouTube in particular reign supreme as platform of choice, but TikTok is catching up and it's back. The NFL season starts this Thursday, which means more sports betting on sites like Draft Kings. Our conversation issue with CEO Jason Robbins on what to expect as we kick off this week's sports tech series. Meantime, Jewel Labs, as ed said, agreeing to pay four thirty eight point five million dollars
to thirty three states. This resolves a two year bipartisan pro into the East Grant Makers manufacturing and sales practices the States, claiming that it marketed addictive nicotine products to children. Bloom Works Eric Larson joining us now to discuss, So Eric tell us how significant this settlement is today. It's a very significant settlement. It's certainly the largest that Jewel has had to pay to date involving any individual states.
You know, in the last year or so, the company had settled a few state lawsuits by Washington State in North Carolina and really had all this huge investigation hanging over it in the meantime, So clearly they decided to be done with this particular risk. Although clearly there's a lot of lawsuits still pending out there, but this definitely does away with a lot of the lawsuits that could
have been filed by these thirty three states and Puerto Rico. So, you know, how much does this resolve these, you know, hundreds of other lawsuits essentially, how much of Jewels legal troubles go away as a result of this. Well, it definitely significant that these states have settled, but there are still over two thousand, five hundred civil lawsuits like personal injury lawsuits that have been filed by individuals, and also dozens of cases filed by state governments and school districts.
In fact, in November, the San Francisco School District we'll go to trial in the first of these cases to go to trial, which could really show the potential for how jury might react to the evidence once it is presented. Uh So, that's another one that potentially we could see a settlement before it hits trial. But there are over suits out there, plus several states that are including New York and California by the way, which normally are you know,
have the potential for big settlements or damages. They have lawsuits penning again Stool that are still pending. All right, Bloom Exeric Laws and thank you for that update. Will continue to watch how those civil suits evolved. Let's take a pulse of the VC market and declining market conditions as fears continue about a hawk ish FED, and talk about what is the future of venture capital after the growth at all costs mantra of the last couple of years. I want to get to Sheila Patel get her insight
on this. She's the vice chair and general partner at the Capital Group. Sheila, thank you so much for joining us. So, Karius, just what is your reaction of, you know, to a continuing hawkers fed. Obviously we're getting mixed economic data. Uh, you know, some that looks better than others. But what does this mean for your world and you're investing investing strategy. Look, I think venture capital has been in an amazing run for the last decade, and it was inevitable that we'd
come to more difficult time. Uh. That said, looking at the environment we're in today, looking at everything you mentioned that fed the geopolitical environment, I actually think it's a great time, just as it's been in the past when you've gone through vintages or cycles that are difficult in private equity in other segments of the market. To really look at BC today and the technological innovations that are
driving uh, future innovation and really future productivity. So to my mind, the pullback is actually necessary and a good thing for shaking out where we need to be in BC. So where are we in VC? Talk to us about trends are seeing in the private markets? Are valuations still too high? Are there more valuations that are gonna come down? Look, I think as you're seeing in the latest rounds UM, you're seeing founders realizing they need to do larger deals,
more capital at reasonable valuations. People need cash runaway. That's to be expected. Uh, it's also is able to expect we'll start to see an increasing amount of M and A. And I think many of the reports we're seeing, whether from City Group or works UH that are friends are at BCG with whom we have a strategic partnership have done UH suggests that you'll see more M and A, particularly in the software UH space, and particularly in the
areas like the back office. So I do think there's room for some valuations to move, but I also think there's room for some incredible innovation to come, even in areas that have seen the most difficult you know. I think crypto is a great example of that, where there is an interesting future ahead after this latest downturn. The question is just how long is this downturn gonna last. I mean, we've had guests on the show who are predicting millions of layoffs in tech and that this is
gonna last two to three years. Does that drive with your thinking? Look, I think that's entirely possible. I'm probably a bit more optimistic than that, mainly because I see some positive trends UH in what's going on as well. For example, a recent serve very done by City suggested that CFOs and c h R o s. So in the financial space and the HR space within corporate aren't
pulling back on areas like software spending. A lot of what we focus on it be capital or core areas like enterprise, and these are areas where companies can find efficiencies. At the same time they're going through more difficult economic circumstances. So in many cases, for certain segments within technology, recessionary environment or at least even a difficult environment is not
necessarily the worst environment to the business. Meantime, you're investing in companies that are, you know, taking on big tech, are trying to challenge big tech do things better than big tech companies do. We've been following this big piece of legislation that's been working its way through Congress to rain in big tech, but that's a chance it won't make it before the mid terms. What do you think the impact of this legislation could be and what's the
impact if it doesn't happen before November ace. Look, I think around the world, the technology industry has proven itself to be incredibly adaptable, and this is not the first time or the first region or country to take on issues within big tech. We've actually seen it where I lived for many years UH in Europe, and you've seen UH the tech industry continue to adapt, and I think many within the tech industry are eager to adapt right.
Technology sometimes moves faster than human capacity to handle it. So to my mind, UM, whether the regulation happens before or after the midterms, some amount of regulation to big tech is coming, and I think everyone's accepted that everybody's ready for that. The real issue is UM making sure that it's addressing the right things and really solving the right problems that people have concerns with. So what's your
advice to your portfolio companies right now? You know, potentially or in a prolonged economic downturn, there's a lot of uncertainty. I had. You know, we're moving of an era where there was you know, a lots of money flooding in. But now you know, investors want to see real numbers. Oh look, I think I think, UM, it's a real
chance to go back to their knitting. And I think this is where you really see UH, particularly as we look at portfolio companies, the best in the management side come to the four founders that think about things for the long term, founders that have a sense of their use of cash, their burn rates um and really maintaining their runaway but also have a sense of the competition and realize that they're in a moment right now or some of the competitors are facing more difficult times. They
need to be aggressive. They need to think about ways to push themselves, their business, their product schoolward as solutions in a difficult environment. And I think you see many of the best founders and innovators able to put that hat on. Put the hat on that says my idea is the best idea I've put it together, is is one my competition is showing the signs of weakness or the challenges of the way they've managed their business. And
so this is when it's my time to shine. So where are you placing your bets in terms of where you think we're gonna be this time next year. I think this time next year hopefully, uh, we look at it as a more stable time. I think what we've said repeatedly from our perspective is we invest over many boarders. We we don't raise a fun and think let's all get it put to work right away. So I think you'll still see us slow and steady investing in a
year from now. I think what we've very focused again on the areas where we see opportunities, so enterprise UM. Thinking about the evolution of crypto. My colleagues Matt Levinson and Ryan Savelle just wrote a great piece UM about where does crypto go from here and where crypto and fintech merge. And to this moment, most of what's gone on in crypto has really been driven in many cases
vice speculators. But where do the real world applications come in as you think about emerging markets, as you think about removing middleman, which you've already seen blockchain do in in a place as unlikely as India, in getting money to rural areas and so on. So I think we really still are thinking about where do the ideas of today that may not have been applied well get applied in real world situations tomorrow. You know, I'd take climate check is another curiate area for us that we see
will be important of the next several years. All right, Sheila Patel b Capital Group Vice Chair and general partner. Thank you, Sheila for sharing your thoughts with us. Meantime, Theoronis founder Elizabeth Holmes claims a key witness in her criminal case visited her after the verdict and express remorse about his testimony. Homes alleges that a former Theories Lab director showed up at her home and said his testimony had been twisted by prosecutors. She's now asking for a
new trial after they allegations. This just weeks before Holmes is scheduled to be sentenced. Coming up, the creator economy is booming. How this new industry is changing the face of entertainment and continuing to grow. We'll talk about that next. This is Bloomberg taking a deep dive now on the creator economy, which has experienced a massive boom over the last several years, along with a slew of platforms like Spotify, Instagram, and TikTok and the rule of them all of course YouTube.
To give you an idea, every minute at least at least five hours of footage or uploading to YouTube. Let's break this all down with Roberto Blake, a content creator who also has his own coaching program that helps influencers build their online brands, and our very own Mark Bergen, who is out with a new book today called Light Comments Subscribe. Inside YouTube's chaotic rise to World Domination. You can buy it now. Mark and Roberto, thank you so
much for joining us. Mark, I'm gonna start with you. Can you just start by giving us a sense of how big the creator economy is today and just how much it has grown on all of these different platforms over the last several years. Yeah, there are estimates out there that it's about a hundred billion, which is from zero to to to sixty within maybe the past fifteen years. Really, uh, and certainly in the past five years. I think that's
just exploded as all these platforms have got involved. You know that that mind boggling stat about fifty hours uploaded. The other major stat is that there are now over two million craters in YouTube's partner program, which is actually a smaller number than it was before. If if people in the audience remember that YouTube actually cut that number and it's but they're on ten. But it's been gradually moving it up, and particularly as they're facing new competition
from TikTok. Roberto, you're a graphic designer and a free in term before becoming a YouTube content creator. Why don't you make this big job change and give us a sense of a day in your life. I mean, that's a great question, Emily. For me, a lot of it comes down to the things that are obvious for people. Is you want more time freedom, You want to be able to talk about and do things you're very passionate about. You want to feel a sense of ownership over the
things you're doing. So when you work in uh, you know, for other people, whether it's as a freelancer or if you work at an ad agency something I used to do, UH, it's great. It's very gratifying, it's very fulfilling, and it's very legitimate in the eyes of your relatives. But when you get to do something of your own and have complete ownership of it, get to build it with your own two hands, you feel directly supported by a community
of like minding people. There's nothing like it, nothing in the world like it, And so I think that's what attracts a lot of people to the creator economy and opportunities like YouTube, podcasting and live streaming. Why are you focus on YouTube in particular and not tick to or Instagram. Well, I've been with YouTube almost since the very beginning, and YouTube is still the most powerful search engine in the world across all ages and all of demographics, and YouTube
has a sense of permanence with its content. YouTube is also the best monetization opportunity for content creators, as over eight in platform monetization streams, I teach content creators UH roughly fifteen different ways they can monetize, primarily using YouTube specifically, but I also do understand and value other platforms have
a presence in other platforms as well. But I feel that even with the rapid rise of TikTok, I feel that there's nothing like the permanence and longevity that YouTube content create content creation has, And if you talk to TikTokers on a regular basis, which I generally do, you'll find that a lot of them have the intention of pivoting and moving to YouTube at some point in their career because they do want a sense of stability and permanence,
and they also want the potential for evergreen content to
benefit them and be monetize able in the future. They know right now with the TikTok Creator Fund, that while they're getting something in exchange for their content, they know they're disproportionately underpaid for the attention when compared to traditional content on YouTube, as well as in the live streaming community and within YouTube live stream and podcasting, their air higher opportunities in terms of direct compensation when it comes
to sponsored content and brand deals, and it's not even close. So so for me, that's probably one of the bigger deals, not even close. Uh is in one way to put it mark you know, we've talked so much about the threat of TikTok to YouTube, but to Rebner's point, it is a lot of disconnected content and it is less permanent. How big a threat is TikTok really in your view to YouTube and how is it How is YouTube addressing
the threat internally? Yeah, I think it's a viable threat, and certainly more so than you know, Instagram, Facebook have tried multiple times to really build out a creator economy and thus far I failed. What TikTok and bite dnsiteds to do is to demonstrate, you know, Google has a remarkable system, as roberta pointed out book both for Search uh and for Modernization, in the world's biggest digital advertising company, and it's it's had this machinery in place for for years.
TikTok clearly has a lot of political problems, um and they haven't really got a proven yet that they can be a threat to YouTube at at large scale. So YouTube's response so far is to is shorts. This is their their feature that's sort of short video. They're driving a lot of pushing a lot of viewers. They're encouraging creators to go there. They're about to flip the switch on modernization. You know, it's unclear how productive productive that will be for the company and how they're going to
sort out modernization. But if there's a lot you know, if history shows is anything that is that YouTube has a pretty strong track record of sort this out, and I think responding to the to the threat from of TikTok in a really significant way. Reward are you're the founder of Awesome Creator Academy, which is a coaching program that helps influencers build their brands online. With some fun watching your videos earlier today, what trends are you saying?
What are you telling creators today advice that that might not be obvious. I think the thing that's not obvious to most content creators is their potential, their overall potential when it comes to their earnings, and the fact that there is a compounding effect from their content over a
period of time. So what a lot of creators don't do is they rely so much on platform modetization, whether it's TikTok and their creator fund or YouTube and their ad Sense partner program and things like that, that they don't explore other monetization opportunities, and they don't think of what they're doing as what I refer to as content as a service. So that's one thing it's not obvious to them is that it's very much almost like software as a service, which most of us are familiar with.
We have these wonderful subscription programs everywhere now that we're all paying for well. Content creators have an opportunity to use content as a services leveraged not just with ad revenue, creator funds and sponsored content brand deals, but they can build their own communities around things like their one hundred or one thousand truest fans, and they could have monthly membership programs of their own, whether on platform or off platform.
They need to look at things that give them recurring revenue outside of the platform, and telling more creators to look into opportunities to build their own products, build their own merchandise. YouTube recently partnered which Shopify, and they also expanded their creator monetization program with regard to merch and even physical and digital products. Used to have a ten thousand subscriber their it's it's so fascinating, We're gonna have to log onto you tube and watch your videos to
find out the rest. But appridging joining us and of course pleased by marks book. Welcome back to one Work Technology and I'm win Chang in pal Alto. I want to get back to a check on the markets and shares of so called meme stocks on moon Works at Ludlow back with an update. Yeah, and one name in particular, which is bed Bath and beyond that stock falling for
a fifth straight day, it's worse run since July. It follows news over the weekend that the company's CFO, Gus star Are Now died on Friday after falling from a skyscraper in Manhattan, the company saying that they have appointed an interim CFO. You see that decline more than eighteen percent. Reminded that this is a stock that in the month of August surged by zero percent. Caught up in the meme stock frenzy where retail investors discussed this other stocks
on forums online, such as Reddit. That decline being elt in the market. You see other so called meat stocks like game Stop down eight percent. AMC Entertainment also down, but the activity around this area is really dropped off. If we use cool volumes as a proxy, we've seen the fewest CAOL trades in this space, particularly for names like game Stop, since nowhere near the frenzy that we
saw in early one. Who is interesting to see some reporting on the Bloomberg terminal while I was away about this idea that when we got to return to school also meaning a return to college, that we might see the frenzy in meme stocks pick back up. Because a lot of the traders that are doing this are young. They're discussing this online in their spare time. That hasn't really been the case. We've seen that sort of negative sentiment around Meme stocks continue, with bed Bath and Beyond
being the exception in the month of August. But tragic news of course relating to that that company, and our thoughts of course go to us family such tragic news. Thank you for that update. I want to move on to the I p O market, now on pace for one of its worst years in decades after an incredible amount of deal activity of course last year in one, leaving many companies with few options as they waiting for the market to calm down, joining us Now Equities and
founder and chief strategy officer Phil has Let. So, Phil, I believe last time you were on the show, you said the I p O window is totally sailed shut and not opening for a very long time. Do you still believe that? Yeah, Well, it must have been a heck of a party at the Pliat burning Man, because it's been incredibly quiet this morning and today with news. You know, we normally see kind of a stampeding of ip O news and big funding rounds on the day
after Labor Day. Companies really eager to get out there and announce something big, and we've seen barely anything. So, um, I'm a bit surprised that, you know, kind of post summer that there's still been a lot of activity. Um, in fact, that we're kind of starting to see that maybe some deals are getting done, but a little bit
more discreetly, maybe with a bit more structure. And so I think that, you know, the thesis remains the same that actually the ip O window is still pretty quiet, and yet we're hearing that insta cart, for example, is still considering going public this year. Why would a company
do this now when conditions are so unfavorable. Sure, I think there's a subset of the private unicorn companies that have such a large brand and such a large cache that really the only way to continue elevating awareness and creating a currency to buy smaller companies is really to go public. Um. Insta Cart, I guess continue to raise money in the private markets, but if they really want to have extra prominence, uh, they are going to tap
the public markets. And they've also kind of created a clean path to do so by kind of already knocking down their valuation publicly having a very senior executive team, including the CEO. UM and so I kind of think of it's similar to how maybe a company like Ali Baba or Facebook, maybe even a tougher environment, still elected to go public. So how long do you think the I p O window is going to be frozen? Shot, double locked? As you say, you know, what, what is
the time frame that company should be planning for? Yeah, I keep pushing it out more and more. Um, I kind of think of what's happening now is really what happened during the start of COVID, but it's just being stretched over a longer period of time. If your call kind of April May and June of twenty I p O s, we're pretty much at zero, and what we're seeing is almost just kind of a stretching out of that.
And what you now see is basically a game of chicken between investors and allocators and I p o s and companies that are ready to go public. If you're a company that is profitable and good stewards of your capital, you can wait as long as you need to um. But if your company that elected to grow at all costs and burn cash, you're going to have to become
markets at some point. What I actually think may evolve a bit more is that will see some more m and a activity both for strategic investors and also from private equity investors that see some opportunities where deals can get done with a bit more structure, a little less public scrutiny. So I think we expect that to pick up quite considerably in absence of an I p O
market that's active. I wonder how many more valuation cutdowns we'll see, though I can imagine that You've got a lot of vcs out there sitting on port oil companies that have valuations that are just not right for the times. Absolutely, what I think will start happening is more and more deals that are actually happening kind of behind the scenes, are deals with structure, and what I mean by that is that investors are getting much more preferential terms for
the money that they're putting into companies. I think we just saw recently that Joker is planning to raise money at just slight valuation bump up from their last round, but it also basically gives a guaranteed return to the new investors. More and more those deals are happening, and here at Equities and we're also hearing of those deals happening as well, and so I think those will continue. But to your point, there's a lot of investors that do you want to see some exit and some some
realization of the investments they made. It's becoming very hard for ventual capital firms to raise their next fund when they can't actually return capital to their limited partners, and that's you know, creating some very tense board meetings, which again is something we've talked about and kind of harped on, but I think that the factor remains true. All right, Phil has Let Equities and founder, chief strategy Officer. A
great to have you back, Phil. As always coming up, it has been a hundred eighty da since President Biden signed that Executive Order on digital assets. What does the rest of the government think about it? Christin Smith the Blockchain Association joins us. Next, this is Bloomberg a slew of reports or do this week to the White House stemming from President Joe Biden's Executive Order on digital assets, including one on the future of money payment systems and
the implications of the Central Bank digital currency. Though these reports likely won't be released to the public till mid September, let's talk about what we can expect with Kristin Smith, executive director of the Blockchain Association, along with our crypto contributor Shannali Boss. Thank you both ladies for joining us. So, Christen, what do you think we're going to find in these reports? Well,
I think it's really interesting. I mean, this is the first time that the federal government has looked at crypto regulation from a comprehensive perspective. You know, as you recall,
President Biden issued this executive order back in March. He gave various federal agencies, both financial regulators and some non financial regulators, mandates to look at different issues, to look at some of the concerns we have with the space, but also some of the benefits that the crypto industry and sector could provide, and come up with recommendations about what types of regulation are needed going forward. So I think that we're going to see a fairly balanced analysis.
I think we'll see some things around competitiveness and inclusion that the industry is going to be very excited about. UM. I do think we'll see some um concerns around, you know, sort of the lack of regulation of dollar back stable coins, which is something that has been discussed for a long time, maybe the need for some spot market regulation. But overall, this should provide a pretty substance have roadmap for policymakers should they choose to accept it as they consider legislation
this fall and into now. Block Tin Association has had a state at the table with policymakers. How have they been processing this crypto winter and all of the drama. Yeah, well, listen, I think you know there's an understanding that crypto is here to stay right like that wasn't always a concern, And even in this market downturn, I think policymakers have even more incentive to try to do something in a space, especially if you look at the beginning of the summer.
We had the collapse of Tera Luna, We had a couple of bankruptcies, we had sort of the three or was Capital. You know, there were a bunch of events that had big impacts on consumers, and instead of pushing away from this space, policymaker said, all right, this is a space where we need to make sure that we fill regulatory gaps. We need to better understand what regulations already exists, We need to figure out what are the options going forward. And so you know, Congress has been
um pursuing several different bills this year. We saw the one that's still a brand bill earlier the spring. We've seen the Digital Commodity Exchange Act in the House. We have a new bill in the Senate that attempts to regulate this space. So they've been generating their own ideas and I think, you know, the executive order process and
Congress's effort are going to converge quite nicely. To have just an overall more educated policymaking group that is looking at this in a thoughtful, comprehensive way, in a way that you know, moves the ball forward, but not so rushed that we get the policy wrong. And so I think we're really setting the stage up to get a
good bipartisan compromise and and fill those regulatory gaps. What about the agencies and regulators themselves, Because even though the Executive Order was seen as a really big step for the industry, a common critique I get when I'm talking to market participants is that it really embolds in each of the agencies separately, that there's a lot of conflict
among them on how they define certain issues. To take the sec and the securities issue when you come to coin base in particular, So do you see the agency's consolidating power to one agency or another, and how do you believe that Congress may enable that or or concept with that? Yeah, well, the Executive Order did require cross agency collaboration on different topics. UM. I do think the core issue out there when it comes regulating the crypto markets,
like particularly the bitcoin markets. You know that those that are truly commodities, is that today, neither the SEC or the CFTC has jurisdiction in this space. Right What we need is Congress to come in and say, all right, we have this commodity spot market. Other commodity spot markets, like the grain market for example, they don't have any regulating federal regulators. So we need to find a new federal regulator to come in and regulate the spot market.
And so I think Congress has a choice. What's interesting is that the three major proposals that have been at reduced and Congress so far have all pointed to the CFTC as being the appropriate regulator for the crypto industry, probably because they already have regulate regulatory powers over crypto futures um and on fraud and manipulation in the underlying markets. So I think that that's probably the place that's going
to end up. It could also go to the SEC as well, but Congress seems to think that they want to give this authority to the CFTC. And what does it mean for the SEC if more of that moves over, because there's so many things that they were looking at, n f t s, other securities issuances for potentially here do you think the SEC ultimately loses some power over
these markets as they've already started on the enforcement path. Yeah. Well, I would argue they don't have any authority over um, you know, sort of the pure crypto commodity markets, right, I mean, the SEC has has authority over things that are securities, and you can use blockchain based systems to issue you know, equity to organized shares of stock um. You know, when you have something that's truly a security, the SEC is obviously going to have a role to
play there. I think the problem has been for innovators is that there really is a big gray area there. It's hard to know when they apply. And what we just need is a framework that addresses these concerns. And you know, the stakes today are pretty high from a regulars very perspective. Right, If you're deemed a security, you're regulated by the SEC. If you're deemed a commodity, a
crypto asset commodity, there's no regulator at all. So I think by having a regulator, perhaps the CFTC, to regulate crypto commodities, then there's still going to be consumer protection, there's still going to be market surveillance, there's still going to be uh, disclosures that help give consumers more information and investors more information, and so it won't be such a high stakes decision if something is a security or commodity.
So I think that will help pave the way for a more constructive dialogue if Congresses indeed give the c FTC jurisdiction. All right, christ And Smith, executive director of the Blockchain Association, always appreciate you joining us and taking us inside these rooms a bit alongside our own shi. With NFL season kicking off, we are exploring the intersection of sports and technology all week long. Today we're starting with sports betting, now legal in thirty one states with Kansas,
I mean, the most recent to join the field. Draftkins and rival FanDuel our position to maintain their leadership of daily fantasy sports, a market that has ballooned to four billion dollars dollars in terms of annual entroyphees Draftkins predicting this football season will be the biggest moment yet for sports bettors. Joining us to discuss CEO Jason Robbins himself, Jason, great to have you back with us. Give us a status update on the numbers and just how much you
think NFL kickoff, well pick start and already booming industry. Well, I mean this is our holiday season, UM. You know, to make an analogy, so uh, you know this is when everything, all the numbers go up and it's a fun time a year. A lot of work from the team goes into preparing for this. We've launched a lot of new features and products of the last six days, including our new Rainmakers football game, which I'm really excited about and UM Week one is going to be fantastic.
I'm really looking forward to. You're also launching a new blockchain initiative whereby UM betters will be able to collect digital player cards. How old this work and how big do you think blockchain and web three will be for sports? Well, Rainmakers, which is the product referring to UM, is I think
one of the most innovative things we've done ever. UM. It takes fantasy sports, which you know, the idea is you're like a GM and you you know, you have players that that you get UM and it immortalizes that ownership in the form of you know, an n f T on the blockchain, So instead of drafting a player, you buy that player's n f T and you can
play that in a game. UM. So it's really exciting because it mixes things that our customers are really interested in, which is the game and this sort of you know, idea of being able to pick your favorite team or your team that you think is going to win UM with also a strong interest our our customers have shown in blockchain and collectibles. So UM, I think it's really a new way of looking at fantasy sports. We think it's the future of fantasy sports, and we're really excited
by some of the early traction we're seeing. There's sales that are going off for a big dollars on the marketplace. Right now, Vandel seems to have pulled ahead of the industry in terms of market share. What's your play to counter that, Well, you know, it's definitely seasonal. We typically do better in the NFL season where we have a big boost of customers UM, and if you look at the eye gaming side, we're ahead of them by a little bit. So we're just gonna keep trying to have
the best product UM. You know, for us, we think product is the what ultimately will will win the customers over UM, and we think the more people that we we get to show some of the new things that we launch this NFL season, Um, the more they'll be excited about keeping their play with DraftKings. So UM, we're just gonna kind of keep you know, focusing on product, focusing on customer experience. UM. We think being the most customer focused and customer centric, which entails having the best
product and overall experience, is what will win the day. Obviously, bigger business has has also meant at times some bigger losses. Some of your competitors have said they're going to pull back on AD spend this year. How is your spending strategy changing as the market evolves and uh, and also you know we're heading into a potentially prolonged downturn. Well, we've always been very you know, data driven in our
decisions around spending. So UM, we look for paybacks that that meet our threshold, which in case the customer acquisition is typically three year payback or less. Um. Same thing on new states we launch, we typically look for a two to three year path to profitability timeline. So I haven't really changed that. I will say though that with some of the competitors pulling back, UM, you know, we're able to achieve great results without having to be quite
as aggressive on the advertising promotion front. We're still being very aggressive. This is an important time of year, so we're making sure that we have, you know, a presence out there, and we get in front of customers and we get good offers that are interesting to them. But I do think the competitive environment is rationalized quite a bit year over year. If you compare it to this time last year, it's really just a night and day. We also got a big election coming up. You've got
some proposals on various ballots in California. In particular, UM California could become the largest sports betting market in the world next to the UK. UM you look back to proposal that would allow draft kings to offer sports betting anywhere in the state in partnership with various Native American tribes. There are various other proposals that are countering this. You know, what is your polling show showing you about the likelihood of your proposal passing? And how much are you prepared
to spend between now and November. We're seeing really good things in the polling. You know, obviously there's a lot that's going to occur between now and the election. It's still about two months away, but everything we're seeing in the data is great, and we think more importantly, UM, policy wise, it makes sense. It's something that Californians want.
Those that are into sports betting in California, most of them are already doing it anyway in the illegal market, which is generating no tax revenue and has no consumer protections. And our initiative will generate hundreds of millions of dollars a year to help combat homelessness and mental health issues in California. And we also partner with tribes that are
getting a cut of it as well. It will help especially a lot of the smaller tribes, um that you know aren't as maybe fortunate as some of the ones that the bigger casinos do well and and and really will help with education programs and other things for those tribes. So we think it's great for the California sports better, it's great for those that want to see real help on the homelessness and mental health issues, and it's great for the tribe. So UM, we're really excited about it.
We think it's great policy for California. Polling numbers look good, UM, but there's a lot of time between now and the elections. We just gotta keep getting our message out there and hopefully it will resonate with voters. One one word answer, Jason, who are you putting your money on for the NFL playoffs? Uh? You know, I'm a Patriots fan, so I gotta say Patriots. I'm putting my money on them, but I'll be rooting um. But you know, there's a lot of great teams this year.
I'm really excited about the opening game. I think it's going to be awesome. And you know, it's a really good season, a lot of great play. NFL content has never been better. See DraftKings. Great to have you. Thank you. We are at Apple tomorrow. You don't want to miss our special show. This is Bloomberg