Thank you for standing by. Welcome to the DraftKings Third Quarter 2025 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Michael DeLalio, Senior Director of Investor Relations. Please go ahead, sir. Good morning, everyone, and thank you for joining us today. Certain statements we make during this call may constitute forward-looking statements that are subject to risks, uncertainties, and other factors, as discussed further in our SEC filings, that could cause our actual results to differ materially from our historical results or from our forecasts. We assume no responsibility to update forward-looking statements other than as required by law. During this call, management will also discuss certain non-GAAP financial measures that 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. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, slide presentation, and business update, which can be found on our website in our quarterly report on Form 10Q filed with the SEC. Hosting the call today, we have Jason Robins, Co-founder and Chief Executive Officer of DraftKings, who will share some opening remarks and an update on our business. Following Jason's remarks, our Chief Financial Officer, Alan Ellingson, will provide a brief review of our financials. We will then open the line to questions. I'll now turn the call over to Jason Robins. Thank you, Mike. Good morning, everyone, and thank you all for joining. This is the most bullish I've ever felt about the future of DraftKings. This may sound surprising given we are revising our fiscal year 2025 guidance ranges today. However, underlying growth in the business is accelerating. We are also increasingly advantaged through new exclusive marketing agreements with ESPN and NBCUniversal, as well as our leading product offerings continuing to improve. Finally, we are launching DraftKings Predictions in the coming months, which we view as a significant incremental opportunity. Overall, I believe that our long-term financial potential has never been brighter. The progress we've made over the last few years has been outstanding. In 2022, we reported a little more than $2 billion of revenue and nearly $1 billion of negative Adjusted EBITDA. In 2025, only three years later, we expect to generate $5.9 billion-$6.1 billion of revenue and $450 million-$550 million of positive Adjusted EBITDA. Our Sportsbook net revenue margin is on track to increase by more than 400 basis points over the last four years, which is more than 100 basis points per year on average, as our parlay handle mix and efficiency of promotions all continue to improve. We are achieving this expansion while also maintaining very high customer retention rates. In fact, retention of NFL Week One customers is up over 300 basis points in the last four NFL weeks compared to the same weeks a year ago. Recent product enhancements are also driving strong customer engagement. NFL handle has grown 13% season- to- date, and NBA handle has grown 19% season- to- date, an acceleration compared to the growth we were seeing in recent quarters. That acceleration has continued to build in the first month of the fourth quarter, as our total Sportsbook handle increased 17% year-over-year in October. Parlay handle mix continues to surge, with year-over-year gains of 800 basis points for NFL season to date and 1,000 basis points for NBA season to date. iGaming has been similarly strong, with third-quarter net revenue growth accelerating to 25% year-over-year, the fastest growth we've experienced since the first quarter of 2024. We are even more excited about the future. Our new exclusive marketing agreements with ESPN and NBCUniversal provide us deeper brand affinity and broader reach, including unmatched NBA access. In fact, early indicators suggest our NBA share is significantly higher than it was at this point last year. Our top-rated Sportsbook experience continues to set the standard for speed, depth, and breadth, and we will soon launch Spanish-language functionality that will meet the demands for a growing audience ahead of the World Cup in 2026. In iGaming, we're developing innovative slot and jackpot content and recently brought in a new leader to solidify and grow our position. The next point I would like to touch on is sport outcomes. We have made significant progress growing our Sportsbook hold percentage and net revenue margin in recent years, primarily due to parlay handle mix increasing, while also experiencing short-term positive and negative sport outcome variances. It is important to understand that over the course of most sports seasons, this variance typically evens out and should not be overly significant. However, because sports seasons do not align with fiscal quarters, there will be certain periods when outcomes positively and negatively impact reported financial results. For example, in the second quarter of 2025, Sportsbook-friendly outcomes positively impacted our revenue by roughly $100 million, driving record performance for revenue, Adjusted EBITDA, and Adjusted EBITDA margin. Conversely, in September and October, customer-friendly sport outcomes impacted our revenue by more than $300 million, as just a handful of NFL games had a pronounced effect. Over the long term, however, sport outcomes do not affect the underlying earnings power of our business, but there will be periods where we can meaningfully overperform or underperform our expectations based on these variances. I'd also like to touch on the recent rise of predictions. We have experienced numerous waves of competition in recent years, mostly from well-capitalized companies that have built or acquired strong sports betting product offerings, and those have had minimal impact on DraftKings' revenue trajectory. By comparison, predictions are structurally limited, lacking the depth and breadth of a sports betting offering. There are also numerous data points from around the globe that validate that predictions in sports are relatively small and largely incremental relative to traditional sports betting. In actuality, we see predictions as a significant incremental opportunity. We are excited about our pending launch of DraftKings Predictions and its potential to expand our total addressable market. In the coming months, we expect DraftKings Predictions to enter many new states with sport event contracts, unlocking a new customer base and revenue stream. Nearly half the country's population remains without access to legal online sports betting, but there are several other companies offering federally regulated predictions in all 50 states. As growth in predictions continues, this may also motivate more states to legalize online sports betting and iGaming with reasonable regulation and taxation. To close out my thoughts on predictions, I would leave you all with three key takeaways. First, we will pursue this opportunity, we will compete, and we will win. For the same reasons that we have been successful competing in the sports betting industry, we expect to succeed here. Second, we will be thoughtful in how we launch DraftKings Predictions and do so in a way that is respectful of other stakeholders. As such, we plan to focus on the states where we do not offer Sportsbooks, which is also where we believe the vast majority of the financial opportunity exists. Third, we will be measured in our investment level, understanding that gross profit payback periods need to be shorter relative to our more established product lines, where we have more predictability around what customers we acquire will be worth over time. Finally, I want to touch on our share repurchase program. We have bought back 9.3 million shares since the inception of this program, and we are pleased to announce that our board has authorized increasing our repurchase program from $1 billion to $2 billion. We anticipate being active with share repurchases over the next quarter and expect to continue returning capital to our shareholders as Free Cash Flow ramps up over the coming years. Thank you all for your support. We promise to continue working relentlessly to create meaningful value for you in 2026 and beyond. Thank you, Jason. Before I cover our fiscal year guidance, I'd like to discuss our third quarter 2025 financial performance. Please note that all income statement measures discussed, except for revenue, are on a non-GAAP Adjusted EBITDA basis. In the third quarter, we generated $1,144 million of revenue, representing 4% year-over-year growth. We also generated - $127 million of Adjusted EBITDA. First off, we do recognize our third quarter financial results were below our expectations due to the pronounced impact of customer-friendly sports outcomes. In the last two months, these outcomes impacted our revenue by more than $300 million, with just a handful of NFL games having an outsized effect. As Jason highlighted, there is a lot to be excited about in our business. Our underlying customer metrics are as strong as they've ever been. Our MUPS growth was healthy, increasing 6% year-over-year when excluding the impact of jackpot from all periods. Customer acquisition was also a bright spot, increasing year-over-year across the entire enterprise and also for direct to Sportsbook, despite not having any new state launches. In Sportsbook, we continue to drive strong engagement. Sportsbook handle increased 10% year-over-year to $11.4 billion. As we see strong returns on our promotions, we will adjust our investment levels based on deliberate and calculated return observations. The results of our promotions around the start of the NFL season have been outstanding. As Jason mentioned, our October handle accelerated meaningfully year-over-year. That makes improvements are also exceeding what we've been estimating, providing us even more confidence in our long-term Sportsbook hold percentage. Shifting to iGaming, our third quarter net revenue reflected a solid acceleration compared to the first half of 2025, driven by strong year-over-year growth in both active customers and net revenue per customer. On a per-customer basis, we've made strong progress growing gross gaming revenue while also optimizing our promotions for more advanced cohort modeling. Now, I'll touch on our fiscal year 2025 guidance. In August, we guided fiscal year 2025 revenue of $6.2 billion-$6.4 billion and Adjusted EBITDA of $800 million-$900 million. Based on all of the aforementioned, today, we are providing fiscal year 2025 revenue guidance of $5.9 billion-$6.1 billion and fiscal year 2025 Adjusted EBITDA guidance of $450 million-$550 million. Our revenue guidance range implies growth of 24%-28% compared to what we achieved in fiscal year 2024. Notably, our fiscal year 2025 guidance ranges now include the expected launch of a predictions market offering, which we're excited about as we begin to look ahead to 2026. That concludes our remarks, and we will now open the line for questions. Certainly, and our first question for today comes from the line of David Katz from Jefferies. Your question, please. Hi, good morning, everybody. Thanks for all the commentary. I wanted to ask about OSB hold percentage. Obviously, many of us are struggling with getting our models in the right place. We talk about customer unfriendly. That That has been more the pattern than the exception of late. How do you get confidence or help us get confidence that it will and should swing back around? Just talk about the journey of the past year in that regard. Thank you. Yeah, I know it definitely is frustrating when you're seeing it happen, and it feels like it's the pattern. I will say, probably push back a little bit on that. Last quarter, meaning Q2, we actually had positive outcomes, and I think you see the strength of the business model. We generated over $300 million of Adjusted EBITDA in Q2 on positive outcomes. I think it can swing either way, certainly, and this quarter, it unfortunately didn't go our way. October also wasn't a great month for us, but over the course of time, it normalizes. I think as you're thinking about modeling out years or multi-year periods, certainly, I think that can definitely be something where you can assume a smooth sort of curve. I think if you look at short periods, you're going to have times when sport outcomes impact results, and there are going to be times where it allows us to overachieve our expectations and times where we fall a little short. Understood. If I can ask one very quick follow-up, I noticed that you added an individual to the board, Greg Wendt, who many of us sort of know as a well-regarded person. I'd love to just get a quick comment on how you see him adding value for DraftKings. Thanks. First of all, Greg is a great addition. We're really excited to have him on the board. I've known Greg for many years. He is obviously an expert as it comes to investing. He's been a long-time gaming investor. Also, very recently left that position. I think what's nice is he's somebody that we can talk to that has a really strong perspective on what investors are thinking and understands capital markets really, really well. He has tremendous connections on the public affairs side. He's an all-around smart guy and really, I think, is going to contribute to the strategy and direction of the company. We're really excited to add Greg and just had him in our first board meeting this week and looking forward to his contributions. Thank you. Thank you. Our next question comes from the line of Stephen Grambling from Morgan Stanley. Your question, please. Thank you. As a quick follow-up to David's question on hold, aside from just hitting structural hold, I think one of the concerns is whether Parlay is also increasing the overall volatility of hold. What do you think are the biggest opportunities to dampen the volatility over time, or how do you think about balancing pushing higher structural hold versus potentially higher volatility? I think we always view it as we should maximize long-term value. And obviously, in some cases, that may come with some increased beta, but I think that over the course of time, maximizing long-term expected value is the right strategy as long as you're managing risk in a way that's appropriate. Really, where this occurs most acutely is when you have sports or individual events that are very concentrated. Something like baseball or basketball, where there's long seasons with many, many games, you're going to see less of that. Something like an NFL Weekend or Super Bowl or March Madness or a big fight, you could see bigger swings because those are individual events where a single outcome affects a large volume of betting. There aren't other events to offset it and to normalize over time. I think that's just the nature of the business. What we do is we certainly make sure we're managing risk. If you look at the overall negative outcome impact we've experienced this year, it's only around 5% of our total revenue. Obviously, in a given quarter, when a lot of that hits, that can be meaningful. From a risk management and from a cash flow and making sure that we're still generating profit and liquidity, I think that's something that we always keep in mind. We won't take liabilities above a certain level. If we ever did need to, we would find ways to hedge off or we wouldn't take them at all. I think within that constraint, being able to know that you're maximizing EV is important. Obviously, if that comes with some ups and downs, so be it. As long as you can manage the business in a way that you're managing that risk, I think maximizing long-term value is the way to go. Fair enough. If I can sneak one on the prediction markets, I think similar to the start of online sports betting, there's a lot of concern about what profitability looks like here. I think you mentioned the shorter payback window potentially or what you hope. Can you elaborate on how you think about the profitability of a prediction market product and any initial thoughts on what investment could look like if the market plays out the way you hope? I think what we're going to do is the same thing we do with everything, which is we're going to be very data-driven, very analytical here. Starting off with very conservative views on LTV and a very conservative approach to payback periods, I think, is smart because, one, we don't have any data. In absence of that, being conservative is always best. Two, we don't really know what the future of this product will ultimately look like. As we've noted, I think as this continues, states will legalize OSB. That might be helpful because those customers may convert. The actual predictions product is unknown at this point in terms of what the longevity of customers will look like, what the spend will look like. The products themselves are super nascent, so I imagine retention initially is going to be a challenge. Over time, I think it'll get better. Same with monetization, but they're very bare bones at this point. I think, while certainly an exciting area and one that we really are excited and bullish about, it is still so early and a lot of unknowns, and we have zero data. We haven't launched a product and don't know anything yet. Once we start to gather data, we're going to make different decisions. We're going to look at what the data says, and we're going to adjust. I don't see us dramatically extending the payback period, so I think we'll kind of keep conservative on that, but we'll have much more precise data with which to make those decisions. It won't be as much of an estimate. We'll be able to be a little bit more of a lean-in there. As far as total investment, because we do not have that data yet, I really do not know. It could be anything, but we are not going to spend foolishly. If we find that we are not able to get the kinds of returns that we want, then we will not do it. The other thing I will say is that because we have so many—we have such a great presence across the sports and media landscape already, we do not think there needs to be a ton of incremental spend, at least on the national level here. There might be some incremental local spend in key states, but I think on the national level, we feel like a lot of what we already have can be used to effectively get this message across as well. I'm going to jump in here too. This is Mike. Analyst, as a reminder, please stick to one question. We have a lot of participants in the queue. Thank you. Our next question comes from the line of Dan Politzer from JPMorgan. Your question, please. Hey, good morning, everyone. Thanks for taking my question. On prediction markets, Jason, maybe can you talk about the conversations that you've had with regulators and shed light on why you feel comfortable proceeding here when certainly some of your larger peers have not? Along those lines, how you see the prediction market product evolving in the coming years, just given this is where a lot of tension from investors is right now. Obviously, we really value and treat as with the utmost importance our relationships with the regulators and policymakers in states where we are licensed and operate. We have had numerous conversations with them and wanted to make sure that when we were acquiring Railbird, other things like that, they were hearing from us and understood what the rationale behind it was and how we were thinking about it. I think through the strength of those relationships and conversations, we got comfort in the approach that we are taking. As I said in our note on the call, we are not going to be in every state with sports. We will not even be in every state with non-sports. I think we have a good sense of where the sensitivity areas are. The good news is, as I've said in the past, I think it aligns also with the opportunity. I think the states that already have legal regulated online sports betting, there is not going to be as much opportunity in the prediction space, at least in the sports prediction space. To me, that also kind of makes it a no-brainer to focus on the states that do not have online sports betting already. Just sorry, and how you see this product evolving. Do you think it's just limited to sports or evolves into a broader subset of prediction offerings over time, gaming, all the other stuff kind of under the hood? I think if you look overseas, sports is really where most of the concentration and volume is. Even here in the U.S., sports is what's driving all the growth. I mean, not to say there won't be other things. I know elections are popular too, and in certain places, we'll be able to offer that as well. I think that for the most part, the volume and opportunity is going to be in the sports space. Not to say there couldn't be other innovations and things that create opportunities over the long term, but that's less proven and I think something that at this point, we don't have as much certainty in. Got it. Thank you. Thank you. Our next question comes from the line of Clark Lampen from BTIG. Your question, please. Thanks a lot. I'll keep the, I guess, sort of theme going here with prediction. Jason, I'd like to, I guess, just get a little bit more sort of specificity around the significance comment in the letter. Is that largely going to be just sort of customer access in new states, or is there—as you guys think about winning, as you put it, in this market, where can you guys, I guess, bring something unique here to the extension to extract some value that maybe others can't? Thank you. Yeah. I mean, to the extent that everyone is viewing this as competitive, I think it's the same way we compete with anyone. We would go out and out-execute across all the key things that matter: product, customer experience, marketing. All of those things are things that we have an extraordinary amount of data and expertise around and systems and processes that we've built that at scale are able to perform at the highest of levels and compete with the toughest of competition. I view that as a huge advantage that we're going to have along with our brand and the fact that people already associate us with sports. Add in some of the media assets that we have and the partnerships that we have. I think it's going to be really tough for anyone to compete with us. I expect for the same reason that we've been able to do well against other new competitive entrants in the market, and there have been many, many of them over the years, as you all know, we've continued to chug along, we've continued to perform. It is really the same reasons as those things. I think in this case, we're actually starting from an even more advantageous position because we know more and have more scale, more expertise than we did a few years ago. I think it's going to be tough to beat us. Not that I'm taking anything for granted. Obviously, we're going to go out and we're going to compete hard, but I do feel very good about where we're going to be able to find our place in this space. Thank you. Thank you. Our next question comes from the line of Robert Fishman from MoffettNathanson. Your question, please. Hi. Good morning. On the ESPN deal, there's a long history between your companies. I'm just wondering if you can discuss how this deal came together and why you think today it makes sense for DraftKings. How important do you expect the integration in their apps to be as a future growth driver for DraftKings going forward? Morning. Thanks, Robert. First, very excited about this. I mean, as you noted, we've had a long relationship with ESPN back a decade-plus ago in fantasy sports, through the early days of sports betting, and really happy to be reunited with them again in a long-term strategic deal. One, as you know, they're the premier sports brand and property. Between them and some of the others like NBCUniversal and Amazon that we have, we just have an unbelievable presence across sports media. I think with ESPN, though, as you said, they have an app. They have a fantasy database and app that is as big as anything in the world in that category. They just have so many different channels and brands and also great talent. Really, it's going to be something that we leverage across all elements of what we do, from the product to our marketing. I think having somebody that can not only help advertise as a partner and help bring in new customers, but can truly help you engage your existing customers too with things, yes, in their content, but also things that potentially can be integrated, like you mentioned, the app on the digital side with product. I think that can just take this to a whole new level. I'm thrilled. If you look also at their trajectory, it's unbelievable. Some of the deals that they've been rumored to be doing and some of the new apps and things that they're launching, I think that being with a company that's also aggressive and wants to grow and wants to really increase their presence in the sports landscape, that's somebody that you can grow alongside with. Very excited and really happy to be working alongside them again. Jimmy Pataro has been a longtime friend, great guy, and somebody that I know passionately cares about sports betting and knows how important it is for engaging their fans and their consumers too. I'm just thrilled and really excited about this partnership. Thank you. Thank you. Our next question comes from the line of Robin Farley from UBS. Your question, please. Great. Thanks. I would love to ask about how we should think about that split of the $300 million, how much of that was in Q3 versus falling in Q4, just so we could kind of quantify for ourselves a little bit what the structural hold increase was. If I only get one question, maybe I would ask instead, going back to prediction markets for a moment and your ability in terms of your competitive offering and your ability to offer parlays, can you talk a little bit about, I assume, your access to the official sports data, or are there other things that will enable you to offer a parlay product that is significantly different than maybe what other prediction markets are able to offer? Any thoughts on that? Thanks. I'll let Mike follow up offline with you on the first question. On the second one, I think parlays are just challenging with predictions because it's liquidity-based. You can do some prepackaged stuff, and I think that could work. To be able to really have a parlay offering that looks anything like what you'd find on an online sports book just isn't possible. The reason being that on the online sports book, we can say, "What do you want to do?" Then as the market maker, we could say, "Okay, we will make you a market for that. Here you go. Here are the odds." We can do that knowing exactly what the requested amount of the bet is and who's making it. In this case, you have to, as a market maker, create liquidity pools around these things, and you do not always have control over who is on the other side and who is taking how much of your order volume and things like that. Also, just having to have individual liquidity pools makes it hard because then you spread out your liquidity. I just think it is going to be very challenging to do all the kinds of combinability that you can do in a traditional Sportsbook. We will, I think, because of our pricing models and because of some of the other IP that we have, be able to put out, I feel, a better version of that than others in the industry. I still think it will be very limited compared to what you would find in our traditional sports betting product. Thank you. Thank you. Our next question comes from the line of Brandt Montour from Barclays. Your question, please. Hi, everybody. Thanks for taking my question. If we look at the luck impact of the full-year guide of $300 million, and I know you did not quantify that versus third quarter versus fourth quarter, but more in the full year, I mean, if you look at that, if you just sort of assume a flow-through and then look at the full-year guide down to EBITDA, there is obviously a pretty decent gap there between those two. What is that gap broken out between higher promo than expected, spend at this maybe early spend with the ESPN partnership, NBC spend, and obviously any sort of early prediction spend? Thank you. Yeah. It's a good question. Most of it is outcomes. There are a few other little things in there. Probably most notably, as you said, there is some assumption in Q4 for prediction spend, which, as we noted, will be very analytically driven, at least with any marketing portions. I don't know if that'll be—I think we made sure we had enough, but I don't know that we would need to spend it all. There is also some investment on the product and technology side, getting ramped up for customer service, everything else in order to launch the product. I don't know exactly when we'll launch it, but we wanted to make sure we had enough budget in there to be able to develop and launch it in Q4 if it were ready. That's something that we're certainly pushing towards. I do expect it'll be at some point in the next couple of months. Great. Thank you. Thank you. Our next question comes from the line of Jed Kelly from Oppenheimer. Your question, please. Hey. Great. Thanks for taking my question. As we think about next year, obviously, prediction markets are going to be a decent level of incremental investments. But can you sort of highlight or help us bridge where else you're looking to invest? I mean, the OSB product is very good now. I'm sure you want to invest in that. And then you recently hired a new iGaming person too. So can you just help us understand how you're thinking about investments for next year outside of prediction markets? Yeah. I think in terms of what we call kind of core business, meaning the OSB and iGaming products and the states that we have been in for at least a few years, I do not think you are going to see much, if any, incremental investment. In fact, we might actually see a little bit of reduction in things like promotion and marketing. I do think in the newer states, Missouri being obviously one that is launching at the end of this year, we will continue to invest next year if any other states launch. I am hopeful that we get some iGaming and sports betting bills done next year. Obviously, predictions, as you noted, is somewhere we will be making an investment, although we, as noted earlier, are going to be appropriately conservative and seek faster paybacks on that than we do on the other products. The other area I'd mention is AI. I think AI is somewhere that there will be—it'll be a kind of two-way thing. There'll be some places where we're actually able to reduce costs next year, but there will also be some incremental investment, which has a longer tail on where we see the efficiency and revenue generation impacts. Some of that, but maybe not all of it, would pay back in 2026. I think that's an area that we need to be investing in and could have potentially a very significant impact on both our cost structure and revenue trajectory in 2026 and beyond. Thank you. Thank you. Our next question comes from the line of Sean Kelly from BofA. Your question, please. Hi. Good Good morning, everyone. Thanks for taking my questions. Jason, maybe just to connect the two topics of the morning: prediction and pricing. Wondering if you could just talk a little bit about—there's a fairly large narrative from the prediction market side of the world about sort of longer-term pressure on hold rates for the industry. I'm really talking about straight bets and pricing to the customer. Just wondering if we could get your thoughts on that. Then just how price-sensitive or price-aware do you actually think customers really are in the sports book ecosystem relative to products? Does that give you some flex to be able to manage long-tail events and other things like that? Appreciate it. Yeah. So obviously, we'll have to see how it plays out. If you look at pricing now, it's actually a little bit worse on predictions. I think it's going to be hard to get to a point where it's better. If you remember, the reason we have higher margins, meaning higher hold rates, sorry, is because we have a very strong bet mix. Our singles hold is actually nowhere near what our actual hold rate is. Our singles hold is in the mid-single digits. That's sort of the comparison point if you're thinking about predictions. Now, on predictions, you have both the fees that the exchange is taking as well as the other fees that are collected from the FCM or anyone else in the ecosystem, as well as the spreads that the market makers are taking. There is a lot more mouth to feed in the ecosystem versus, in our case, we are the market maker solely on our online Sportsbook, at least for about 99% or 95+% of our stuff. It makes it that we have more margin to play with there. The other thing is, even if there are cases where there is better pricing, promotions do not really work in the same way in predictions as they do in OSB. We can give back money and help create cool profit boosts and other kinds of promotions for customers that engage them, which really is not something that predictions is doing. In fact, predictions is really using rebates to incentivize the market makers to create liquidity. It is almost kind of the opposite. They're giving the promos, so to speak, to the people who are actually trying to make money on the platform, and the retail customer is not getting that. For a variety of reasons, I think the value prop is going to be better. Maybe that gap closes a little bit, but right now, it's not even close. Right now, it's a much better value prop in terms of the overall pricing and promotions that you get using an online sports book. Thank you. Our next question comes from the line of Bernie McTernan from Needham & Company. Your question, please. Great. Thanks for taking the question. Jason, historically, the online sports betting industry has competed on a variety of different metrics, like daily fantasy. Capital mattered a lot. Marketing budgets mattered along with liquidity. Online sports betting promotion mattered a lot early days and now more various aspects of the product. What do you think the battle will be on in prediction markets? Maybe a follow-up to the last question, what is the risk that it does evolve into promo over time? I think the first battle is going to be for customers, but it depends on who you're talking about and what parts of the ecosystem. For the exchanges, the battle is going to be for liquidity. That's the key thing, much like it was in daily fantasy sports. I think if you look at the FCMs or the IBs that are plugged into them, it's going to be much more about customer acquisition to cost versus LTV generation. That'll be about how well you market and engage and monetize the customer. Now, in our case, because we bought Railbird, we're going to have both pieces of the ecosystem. We have to be thinking about both. At least in today's world, most of it's not connected in that way. There's separation between those. It'll really depend on kind of how things vertically integrate over time. That's the best way to explain it. I I think for the exchanges, it's about liquidity. For the front end, the FCMs, the IBs, it's much more about the cap to LTV equation and being able to engage, retain, and monetize customers as well as acquire them efficiently. Thank you. Our next question comes from the line of Joe Stauff from Susquehanna. Your question, please. Okay. Good morning, Jason. I wanted to ask, it's always difficult to reconcile from a regulatory and a legislature perspective for the states. We know, obviously, we're well aware that the regulators know in the various states and obviously talking about predictions. Just wondering if, to the extent you could help us kind of fill in whether or not the legislators are aware of this as we kind of go into a newer session in early 2026 and the implications on the competitive landscape. I think they are absolutely aware of it. This is one of the things that we noted in our letter. I think as states see this continue to grow, it's going to put increased pressure on policymakers to strongly consider whether they should follow the path of the other half or so of the country and just pass sports betting legislation. I also think it's going to help really make policymakers think twice about tax increases because they understand that there is another thing out there that they have to compete with and that operators, ultimately, if the taxes get too high, might decide to just pivot. I think that this is one of the many reasons I think it's a huge positive for us. I think it's an opportunity for us to obviously go into the industry and compete and win. I also think it's a powerful lever in terms of what policymakers are going to be thinking. Legislators are very aware of it. Like anything, it's still early. They're still kind of developing their views on it. I think in the same way, regulators are concerned about it, so are policymakers, legislators as well. Thank you. Thank you. Our next question comes from the line of Ben Chaiken from Mizuho. Your question, please. Hey. How's it going? Good morning. On predictions, you have 50% of the country that are non-OSB states. As you think about the—this is a two-parter—as you think about the launch, how do you think about caps, maybe in absolute dollars in the context or compared to an OSB launch? Then maybe you could compare and contrast versus state launches in terms of targeting customers and how you think about determining the appropriate aperture, if that makes sense. Thanks. I mean, I think really it's the same type of approach that we would take with OSB, simply with much shorter payback periods. Also, we don't have data yet to know exactly what those payback periods would even need to be or what those numbers would even need to be to hit that payback period. We're going to be even more conservative with that in mind. We do have some external data that we can gather from looking at how some of the others in the prediction space have been generating volume and doing some estimations of what we think we can get. We're not completely coming in blind. We have a model. Like anything, you want your own real data to be able to validate that model before you really lean in. I think we're going to test enough that we have data and understand. If you test too slowly, then it takes forever to get there. We're also going to be measured and really conservative in how we do it. As far as an absolute number, I can't tell you that at the moment because we're still trying to figure it out. I don't think we would share it anyway, to be honest. We did mention that we're going to be looking for shorter payback periods. In the past, we've said we look at three-year payback periods for OSB and iGaming. It's going to be something materially less than that. Thank you. Our next question comes from the line of Jason Tilchen from Canaccord Genuity. Your question, please. Great. Good morning, and thanks for taking my question. Wondering if you could share a little bit more on the upcoming rollout of a Spanish-language app. How incremental of an opportunity do you see that as a customer acquisition and engagement driver going forward? Thanks. Yeah. I'm excited about it. That's something we've been actually working on for a little while. What sparked it was really two things. First, the thing that sparked it was saying, "Look, we have the World Cup coming up in 2026. How big an audience do we think there's going to be for that that is Spanish-language first? And what kind of opportunity could that create?" That led us to do further research on just, "Hey, not just for World Cup. What do we think in terms of people betting on NFL, NBA, other sports?" We've also done some testing into Spanish-language media, obviously directing to the English-language product, but more just to see is there incremental customer acquisition opportunity there. Between all those data points, we had a pretty good idea of what kind of opportunity this could represent, as well as obviously other data on just how many people in the U.S. are Hispanic first or Spanish-speaking first and how many live in different states and really understanding based on the states we're operating in what to expect. That was sort of the thinking behind it. In terms of the opportunity, I think the big question is how many people who are Spanish-speaking are going to—I'm sure some of them are already betting. How many of them are going to make their choice of where they go based on the experience in Spanish language? I have to imagine that there's a lot of people who would prefer a Spanish-language app, maybe even some that just won't even use an English-language app. Even amongst those that would certainly prefer a Spanish-language app. If we can create the best experience there, we can get there first and early, especially with a big event like World Cup coming up. It gives us an opportunity to really build outsized share in that demographic. I'm really excited about it. It's obviously a very fast-growing demographic in the United States as well, and one where some of the biggest states where those Spanish-speaking folks live haven't even come online yet, like Texas and California. Much more incremental opportunity in the future as well. Thank you. Our final question for today comes from the line of Ian Moore from Bernstein. Your question, please. Hi. Thank you. The 800-1,000 basis point surge you guys had in NFL and NBA parlay mix is a really massive number. The share gains you called out are great to hear too. You guys credited product innovation and promo strategy in the release, but maybe you could help us with attribution, more product, more promo. Does that inform the strategy on the prediction markets launch at all, balancing the front end with Railbird and the back end? Thanks. I think it was a combination of everything. I mean, our product's never been better. Features like stacks and other sorts of things that help you more easily build and figure out what kind of parlays you want are, I think, at the best stage they've ever been at. I think our ghost leg promotion in particular was really effective at driving parlay mix. I mean, the promotion is designed around parlays. I think it really helped there too. I mean, it was a combination of multiple things, but it's been such a focus area for us. It's just really great to see that it's actually accelerating. I think each season that goes by, can it be even better next year? And so far, it has. This is why we're so bullish on the bet mix side and why we think there's so much long-term margin headroom because we see this acceleration. It doesn't seem like it's slowing down. You look at some more mature markets overseas where they have 60%+ of handle coming from parlays. Between that and live betting, we think those are the two areas that have the most upside and the most growth in the U.S. in the coming years. Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jason for any further remarks. Thank you all for joining us on today's call. We are really excited and feel we're really well-positioned for continued success in the future. Thank you all for your continued support, and we look forward to seeing you next quarter. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.