The Wolf Of All Streets - How Similar Are Gambling, Sports Betting, Crypto, NFTs & The Metaverse? | Matt Kalish Of DraftKings Explains

Episode Date: December 28, 2021

Matt Kalish is the co-founder and current President of DraftKings North America. He has a deep seeded passion for sports, technology, entrepreneurship, crypto, and analytics. Matt was an early NFT adopter and gifted his friends his favorite jpegs, which soon became coveted and valuable, effectively converting everyone around him into NFT bulls and collectors. Today, Matt spends his time innovating at the crossroads of sports betting, blockchain, NFTs, and the metaverse, capturing some of our decade’s greatest trends and technologies. -- Amber Group: WhaleFin is a digital investing experience offering easy portfolio management tools, attractive investment yields, and access to the emerging digital lifestyle. With over $1T in volume traded, WhaleFin offers personalized, compliant, and secure service across dozens of digital assets in 150+ countries.  Find out more at https://thewolfofallstreets.link/whalefin  -- HBAR Foundation: Fund your project quickly and easily with the HBAR Foundation. Apply for a grant and be put on the fast track to success at https://thewolfofallstreets.link/hbar  -- Horizen: Horizen is the zero-knowledge enabled network of blockchains powered by the largest node system with scalability and flexibility unmatched by others. Blockchains built on Horizen are enhanced by zk-SNARK privacy tech and provide massive throughput without compromising decentralization. Horizen can support up to 10,000 independent blockchains running in parallel and issue an unlimited amount of tokens.  More at https://thewolfofallstreets.link/horizen --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode of the Wolf of All Streets podcast is sponsored by Horizon, the HBAR Foundation, and Whalefin. Please stay tuned for more information on all three of them later in the episode. What's up, everybody? I'm Scott Malker, and this is the Wolf of All Streets podcast, where twice every week I talk to your favorite personalities from the worlds of Bitcoin, trading, music, sports, art, politics, basically anyone with a good story to tell. Now, the hottest topic in crypto has been regulation for the past few months. Everybody trying to figure out what the United States is going to do and how it's going to impact the industry. But as much as we'd like to think so, we're not the only industry in the world that's ever had to deal with this problem.

And today's guest has definitely been down this path before. Matt Kalish is the co-founder of DraftKings. So obviously has dealt probably with federal regulators as well as state to state trying to figure out what they can and cannot do to operate their business. He's also a self-proclaimed NFT bull. So I can't wait to hear more about that. Matt, thank you so much for joining me today. Hey, Scott, how are you? So listen, I am a huge Daily Fantasy sports enthusiast. I've been using DraftKings for years. One day I was traveling, I landed in Las Vegas. I went to set my lineup and I couldn't do it.

And I couldn't believe that Nevada, of all places, where everything is seemingly legal, blocked me from Daily Fantasy. Why is it that Nevada does not allow your product? Well, it's one of the things that, you know, DraftKings really does well is state-by-state regulation. Our Fantasy products in almost every state, but it's not in every single state. And Nevada is one of the ones we don't operate in. So all of our tech has been built sort of assuming that every state is going to pass different regulation, offer different products. And through our geolocation tech, we're able to kind of locate where you are and apply the right

products and regulations to your experience when you sign in. Which makes perfect sense. I just found it surprising that that state of all of them in the union would be the one where it was problematic. But I guess I've been surprised before. So like I said, I've been a fanatical user of your product for a very long time. I love Daily Fantasy, but it wasn't always available everywhere, sort of as you just alluded to. And you guys have had a long road with regulators. And now I have to imagine you're seeing some corollary with what's happening in the crypto industry and trying to get this regulated. So what was that process like?

When did it start? And how did you get to where you are today? I would say back in 2016 was probably the heaviest kind of initial effort on government affairs. And what we found is really, there's just a tremendous amount of education required on the legislative process to make sure that the people who are making decisions on the bills process to make sure that, you know, the people who are making decisions

on the bills understand the product. They understand, you know, perspectives from all the stakeholders, consumers, et cetera. And just providing that education has been really important for whether it's daily fantasy sports or more recently in sports betting and iGaming. You know, these are products that legislators haven't always used and they're not always as close to as we are. So just being able to demo the product, explain what kind of protections are important to consumers, give some insight into the offshore black markets that people are using today and what some of the gaps in consumer protection are that we can fill through a regulated offering. Those are the main main tenants of what we're up

to when we talk to government officials. That's an interesting point. And one that definitely exists in the crypto space is that if they can't do it here, people are generally going to find a way to do it. Right. And it's probably going to be through something less regulated and maybe less trustworthy. Yeah. I mean, if you're doing sports betting on an offshore sports book, you can do it. It's not always as good of an experience. You might charge a deposit on your card and it shows up on your bank statement as you bought $1,000 of golf balls. You want to do a withdrawal and it takes six to eight weeks and sometimes they're canceled. Sometimes there's onerous fees. There's a lot of things that can hinder a great experience. And then more importantly, there's no job creation in the US, no tax revenue coming into the States, and there's no oversight to guarantee a good consumer experience. And so these are things that the regulation, if done well, can really solve.

Right. I mean, the role of regulators in theory is obviously to protect consumers. I think in the crypto space, a lot of us think it ends up protecting consumers from the opportunity to make life changing money in products that are relatively safe. Seeing what the crypto industry is going through, would you say that there should be hope that the regulators will come to a reasonable conclusion and they'll give us a positive framework. Because I think a lot of the issue comes with just the confusion. I think a lot of people in the crypto space would actually rather just have clarity, even if it's negative, than no clarity at all. Yeah, I think so. It's particularly interesting too, because so many people really despise traditional finance and the institutions and the bank late charges and fees and all these different things, you know, unequal access to credit. There's a lot of issues that are, you know, have led to traditional

finance being heavily disliked. It's probably like one of the industries that people would most want independence from. And crypto really solved that in a big way. Not that it doesn't have its own risks, but it's you know uh so there's there's an independence in the spirit around people that are in the crypto space in the community that um you know i think want a little bit of hands off when it comes to regulation they want you know government to kind of keep their hands off a bit, you know, like some level of protection, but in a sense, like coming from the community and like the community enforcing those protections is almost more the spirit than the government coming in and doing it. So I think finding the right balance between like, what are the important protections that are needed to make sure people

are safe when they're, you know, trying to get started in crypto and they're not getting scammed and things like that. That piece is important, I think, but not being so heavy handed that you kind of kill the spirit of like a really exciting, innovative kind of part of our life now. Right, I agree. I think that for the individual,

obviously it's exactly as you described, but there's a lot of innovation happening in this space, right? And I know that you guys have crossed over with that. And we'll talk about that in a bit. And they're just going to go offshore if they don't get clarity. And it's really a missed opportunity, I think, for the United States, if they don't get it right and allow entrepreneurs to operate within a framework in the United States. I'm sure you've seen that in your industry as well. Yeah, absolutely. I think

that's always the toughest needle to thread is you want to have things like reasonable tax rates, reasonable regulations so that it's possible to operate and compete with like a black market operation, but you don't want to be like so hands-off where, you know, you're not giving the desired impact of like, you know, consumer experience, safety, generating revenue, creating jobs, you know, consumer experience, safety, generating revenue, creating jobs, you know, like those things are important too. It's always tough to find the balance. And I think one of the biggest headwinds is often people making the laws sometimes don't have a lot of experience with the products and they don't really understand them well enough.

And, you know, going through the right amount of rigor to educate yourself is always important there. I mean, octogenarians don't understand the internet and digital money? Shocking, right? But you can't blame them for that either, right? So I think there is a balance. It's easy to get really mad at them, but for them to do the work is very, very complicated, as you said. So I think there has to be a balance. And I think the onus to some degree actually is on the community to reach out to them and educate them and let them know how important it is. Yeah. Yeah. You know, I think there's a lot of like interesting topics coming up, you know, like at DraftKings, we set up an NFT marketplace that, you know, a lot of our customers

were interested in collectibles. They became interested in crypto and digital collectibles this year, but maybe didn't have a ton of experience with it. And so we set up a system which is just very easy to use. Like you can use your existing DraftKings account, your existing wallet to pay for collectibles. We'll hold custody of them so you don't have to worry about like, oops, I told somebody my seed phrase and they like took all of my NFTs, you know, while you're still learning, you know, so like there's some protections there, but it gives you that initial experience. And I think that there's a lot of people like millions and millions of people who are at that stage right now

where they're like, crypto is pretty interesting. NFTs are interesting. I want to get involved, but you know, there's some issues with like getting set up and getting started that feel daunting. So some of the solutions like Coinbase, you know, making it easy to set up an account and buy Bitcoin or buy Ethereum. DraftKings Marketplace or I'd say like NBA Top Shots, some of the other platforms where they make it really easy to buy your first NFT. Like these are the first step. And then next thing you know, people are buying, you know, hardware wallets and they're on open sea and they're, you know, they're really kind of taking custody and taking a lot of empowerment over their assets. Yeah. That's interesting. I've made that argument that UI UX problems are really the main barrier to mainstream adoption, right? We could talk about how amazing everything is,

but if grandma needs to like open a Metaamask wallet and somehow fund it and then connect it to some site, it's just not going to happen. And so I kind of point to TopShot as the biggest, probably has opening the most doors to 40 something Wall Street guys that I could never get to buy Bitcoin. They all got obsessed with Top Shot and started, you know, buying gifts of guys dunking, right? That was interesting to them and sort of was the gateway into crypto. So making that more exciting, more accessible, I think, as you touched on, that's really the key to bringing more people into crypto. Yeah, just getting started. You know, when I first bought, I didn't know much about NFTs until March. And then I bought my first NFT was a CryptoPunk in March. It was probably like early, early mid-March. And then I was telling all my friends about it. And I would say like six to eight friends, I bought their first CryptoPunk for them. And then they sent me money

like fiat in my bank. And I just transferred them the crypto punk because they didn't know how to do it. And so people are interested. They're like, oh, can I take my credit card out and just pay for it or whatever, send a bank wire. And once you explain, well, no, you have to fund your wallet with ETH. You have to get enough money on. Sometimes there's limits like $1,500 or $1,000 to start, you know? And so just like getting through that initial inertia of setting up your account, if you need like an OTC trading desk to fund your thing or whatever, it's a little daunting, you know? And just having a way to pay for something and get that first experience, it really like wets your

appetite to then do more and more. Very few people say, hey, my first experience with crypto was buying a CryptoPunk, which is like the most coveted NFT you could possibly have. So something had to have gotten you into it for you to go straight to the top and buy a CryptoPunk and then obviously buy them for your friends. What was it that got you into NFTs in the first place? Well, I was following a lot of collectibles like the sports, you know, like on my desk, I have all these, you know, PSA and BGS slabs and stuff. I was collecting lots of cards during COVID. And I was part of that community of, you know, it wasn't a big part

of my life before the lockdowns, but then lots of people were getting into more of these alternative investments, you know, buying sports cards, everything was skyrocketing. So Q1 of this year, like Jan, Feb, I was buying a lot of cards. And then I saw a bunch of my friends start getting into Top Shots and they were starting to look around like what else is out there in NFT land. And it was Gary Vaynerchuk who showed me CryptoPunks the first time. We now do a podcast. We're on like episode like episode 12 i think of our podcast where we talk about sports betting and nfts and we started that uh back in i think it was may uh but he showed me and i bought my first one uh first crypto punk that was the first nft i ever bought and i could just tell like the the strength of that community was so strong and it was small but it was about to

explode so i was like i want to get all my friends in there you know jason and paul my two partners like the strength of that community was so strong and it was small, but it was about to explode. So I was like, I want to get all my friends in there. You know, Jason and Paul, my two partners at DraftKings, both bought, you know, CryptoPunks, a bunch of our board members, you know, Shalom McKenzie, who we bought his company called SB Tech. He's the biggest shareholder of DraftKings.

He bought an alien on the Stuthabees auction for like $12 million. So it's a big part of our inner circle here at DraftKings. And as the wave rode all year long, we just kept going deeper and deeper. And not just as consumers and fans of it, but we wanted to bring that experience to our audience as well. We knew that they would love it. Okay.

Did you buy it as something that you intended to hold forever? Or was there a mania at which point you or some of your friends said, maybe a few million bucks is a pretty good deal for this JPEG and sold. I'm always buying and selling just for fun. You know, like I've, I've probably spent, Oh God, I don't even want to guess. It's all on the blockchain. People know because they know my wallet. They know your wallet. I keep it secret.

So every time I buy something, I get texts and Instagram messages and stuff. Like lots, millions and millions of dollars of JPEGs. And then when I sell something, typically I'm just reinvesting it and buying more. So it's been just kind of like a crazy whirlwind of following the industry, following all the new projects,

trying to get more people involved. And I think we're pretty early in the process. I literally had somebody once have me buy a JPEG for them and then sent me the money through FTX. I thought that they needed to like send me cash because they didn't have crypto set up. And they didn't even realize that, oh, well, if I have FTX set up, I can just buy it myself. Like people just don't get

NFTs that well yet. I think we're still pretty early in the process. I think we're still exceptionally early. But that said, I think that some of the JPEG sort of mania is a bit of a bubble. You know, I don't think that all of it obviously will make it, but punks, apes, the obvious ones with the strong communities that are building brands around it, I think will be here forever. Right. And we'll, we'll maintain their value. I don't know if I can get there on like ether rocks, but I'm sure they'll keep their value too, you know? But what made you then take that sort of personal passion for it and, you know, commit to building a marketplace on DraftKings? Because I'm sure you guys have your hands pretty full with your product without having

to add NFTs. Yeah, a few things. You know, we typically follow our audience to what we do next on everything. You know, there was a time not so long ago, it was literally like three and a half years ago where our only product was fantasy. And then we just kind of follow the trend, follow where the attention of our audience are going to decide what our roadmap is. Jason, Paul and I, it's still a founder led company. We still control our product roadmap. We still make the operational decisions of the company. Like my team is over a thousand people, Paul similar, you know, so the majority of the company report to Jason, Paul and I, and we're still driving very much the roadmap of the company. So I feel like we've been entrusted by our investors to really

understand our audience that we're serving and deliver innovative products that are where their attention's going right now. We've been right about that a few times. We came up with fantasy sports that turned out to be pretty big industry, 10 million plus customers acquired. We launched sports betting and became one of the biggest sports betting platforms in the country. We entered iGaming and did the same thing. So we've had three or four wins on this front that have led to like that trust in us to drive the roadmap. And this is what's next. I mean, I think with collectibles, with NFTs, this digital NFT marketplace, I think is taking so much attention. It's such a big part of culture. We felt like

we're either going to go where our audience is or they're going there without us. You know, it's that kind of thing. People aren't going to stop paying attention to collectibles and NFTs. It's just not going to happen. It's ingrained in culture. And so we decided instead of letting that siphon the attention of our audience away, we wanted to be a leader in that space. And that's what we've been doing over the last six months. Yeah. I think a lot of people don't understand just how big fantasy sports are, that there are multiple factors larger than the actual sports that are underlying, right? I mean, the NFL is a fraction of fantasy football, right, as far as the amount of people participating and the amount of money in it. Is that true?

Like in terms of the… How much money is spent on fantasy sports and the earnings of the platforms and fantasy sports much more than the NFL. Oh, sure. It's I mean, this is the many factors. Yeah. Yeah. The way people engage with NFL is through fantasy and through sports betting. A few other things like maybe they have an office pool or they're playing Super Bowl squares. But DraftKings, this is really how people engage with football. And millions and millions of people show up every Sunday. They're playing, drafting fantasy teams. They're betting, you know, whatever they want.

We have thousands of lines for every game. You know, you could bet on like how many yards certain people will get or whatever. How many passes, how many pass attempts, penalties, whatever. So literally everything you can imagine, you can bet on. And like building out that experience has become like the number one way that people are engaging now at this point. Yeah, it's absolutely life consuming everything that you guys offer, right? I remember that that path from just being a seasonal fantasy player for all these decades, right with all

of my friends. And of course, you experience a guy breaks his leg and your season's basically over. So then everybody understood the appeal of daily fantasy, which was I get to draft a new team every week and I don't have to deal with that. But now, like you said, I can bet on how many yards, how many touchdowns, literally everything. And it's all consuming and incredibly fun. Right. And so it's just a massive industry. Do you see with what you're offering in NFTs that maybe we're at the seasonal fantasy level

and we're going to now start to see all of these other iterations and things in the marketplace that you guys are developing that we haven't even thought about yet? I think so. Mainly with, you know, I think the initial projects that we've seen,

a lot of them have been digital art or collectibles or some kind of digital identity, like a profile style, you know, collection. And now with a little bit more time, you're starting to see a little bit of a move towards more utility based or more complex contracts, basically, like something that brings utility, something that's like play to earn or has gameplay associated with it, things that have longer roadmaps in mind you know and so for

example like we recently announced a partnership with the nflpa to develop you know nfl nfts on draft kings that can be used in gameplay they can be used for utility on the platform like maybe you hold something and you get a free bet every week because you're holding this certain NFT, right? And through that partnership with the NFLPA, we'll be able to use that name, image, likeness of people's athletes, like favorite athletes to deliver that content. So it's kind of like a collectible kind of utility kind of gameplay all in one. It's interesting. And I think the direction that this goes over time will be like projects that have utility that lasts on, like those will do well. And I think the top, top tier of collectibles will do well. And to your point, there's probably a lot of projects that won't in the same way that, you know, there's probably 100 million pieces of art that get created every year.

1% of them ever sell for anything. Top, you know, X sell for a lot. I think there's a long tail there of things that might just never really amount to much in the end. The future of cryptocurrency is a multi-chain world, and you can't have a multi-chain world without Horizon who allows these chains to be interoperable. Horizon is the zero-knowledge-enabled network of blockchains powered by the largest node system,

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to innovate in technology, all of the entrepreneurs go there and most of them fail, right? I don't think that's any different than this market or any other. You touched on all of the potential now of NFTs. I know you guys are already in iGaming, right? Maybe just talk about what iGaming is

and how you guys participate in that. So iGaming is regulated in five markets right now in the U.S. You know, it's like Pennsylvania, New Jersey, West Virginia, Michigan, and most recently in Connecticut. And so that would just be like your favorite casino games, blackjack, roulette, slots. You can play through your mobile device on your phone. So five markets have regulated that. And we've entered into each of the five markets. And it's been just a tremendously popular product for us, really complementary with

the sportsbook and with the fantasy offerings. You know, it's a kind of around the clock offering that can engage our audience. So it doesn't like behold itself to the sports schedule, which is what we've been used to historically. Right. Of course. So you touched on also then in the NFT space, kind of the metaverse and play to earn and all of these things. So how does DraftKings position itself to take advantage of all of that? You talked about a little bit of it, but I really think that that's the next frontier for technology, for individuals to sort of opt out of their normal jobs and go make a living in the metaverse,

things like that. So how do you position yourself to be a part of that metaverse explosion? Yeah, it's interesting. I thought of that as sort of digital identity and what do you have, from a digital standpoint where everybody can see kind of what you're up to, what do you have like from a digital standpoint where everybody can see kind of what you're up to what do you have in terms of access or in terms of utility in that like digital world my first exposure to something like this i think i know this is going to be a thing right my first exposure was probably you know world of warcraft was a game i played 20 years ago right and you spend all this time I spent, I remember I looked once and I spent like 30 days in this game, like 30 days by the hour, if you add it up,

I was like, holy shit, I spent, it was probably in like six months to I think I was like, never not on the game. And what are you doing? You're just running around, you're engaging with other people, you have like your digital person that you represent in the game. You're chatting, you're trying to improve that identity. And I think like now the technology and the capabilities to bring that sort of concept to life are so much greater than they've ever been before. It was the whole DeFi, like the personal finance side of it, where you can transact, you can add to your identity in new ways. You can add things that will give you utility. You know, it's, I think, pretty boundless right now.

And we're really just getting started. Yeah, you can do all those things and now they can translate to value in the real world and not just in the game. Right. I think that's the real sort of light bulb moment is like i can go basically play world of warcraft and i can sell all the stuff that i made that i bought and literally pay my rent yeah i mean pretty much incredible pretty much yeah or i can go get a job and sell world of warcraft characters their skins inside the metaverse well i can't wait to see who my new like overlord is whether it's mark suckerberg or it's probably actually like a 14 year old in their mom's basement right now who's

going to be always overlord of the metaverse but who knows right it's going to be an interesting new frontier that uh i don't think it's going to be sort of centrally owned like i really think it's sort of shaping up to be something really organic and special through these, like, you know, what's happening now will develop into what become the biggest projects and the most highly adopted kind of digital universes that people exist in. Yeah, I like the Facebook move towards the metaverse. I think it's natural, but that doesn't mean I want anything to do with it, right? I have enough crazy people screaming at me conspiracy theories on my Facebook feed

to need to do it with like my VR helmet on, you know, and yelling at my avatar. But I think that people will opt for those decentralized options, right? I mean, don't you think if you're presented with a choice and you're younger, you're obviously not gonna exist in the Zuckerverse. You're gonna go do something, as you said,

that's probably either completely decentralized or secretly being run by a 14 year old in their mom's basement. of Dogecoin and like, whatever, they're going to stockpile and trade and stockpile and build. And next thing you know, they'll show up and they're just like in charge of you. And you didn't see it coming, but it'll be really interesting. Yeah. Hopefully they're only in charge of my avatar in the metaverse that they haven't somehow crossed over to ownership of myself and my family in the real world. But nothing would surprise me, I think, at this point. What's interesting is your point, though.

I personally know a few people who are exceptionally wealthy, you know, billionaires in crypto who are young and are not on any list anywhere, right? Nobody's aware of it necessarily. I'm sure the government is when they report their taxes, but I think we've already seen a major shift in wealth to that younger generation that people don't understand or are talking about. And those are your clients moving forward, right? Well, I think that there's

definitely like, my guess would be the richest person in the world is probably somebody that you don't know right now. And they probably have a bunch of wallets. They're probably not based in the States. And they're probably like have way more money than you think. It's a really, really just kind of interesting dynamic what's happened with the growth of crypto. So many coins are up, you know, 100x plus. It's just so possible to see a giant move in somebody's net worth like that. And yeah, I think it's also just like such an early stage that there's reason to believe that that momentum will continue like if you're a bull in the space

it's not hard to construct like these arguments that whatever a 1 trillion market cap for bitcoin is not that much or whatever like 400 million ethereum market cap for like a leading smart contract platform like that's not that big of a market cap. You know, like it's easy to construct these over time as more adoption comes in. These are going to go up and up. Right. So it'll be interesting to see what pans out and what doesn't. But I think the winners here will win a lot. I agree. You talked about a deal that you just announced with the NFLPA, which is so interesting because the NFLPA obviously is very separate from the NFL. But a lot of the argument

for NFTs, certainly in the music space and the art space, is that the artists, entrepreneurs, athletes can take more of an ownership of their own identity and actually monetize it rather than being monetized by the league or the record label or the platform, which I think is one of the most exciting parts about it for someone who wants to mint NFTs and actually sort of be the one who capitalized on their own likeness. Is that something that you see as well? Yeah. Like in DraftKings marketplace, our first partner was Autograph. This is Tom Brady's NFT company. And he just put together a group of really, really elite athletes like Tom Brady, Tony Hawk, Simone Biles, Wayne Gretzky, you know, like people's favorite, most iconic athletes. And they, you know, brought to the table name, image, likeness, like stuff from their past that they thought their fans would want to collect put together these nft products and we've been like seeing these athletes really take control over like that engagement with their fans through nfts and i don't think that many big picture like that many have really gone down this

path yet but i think in the next one or two years it'll just be like the number one way that people control the engagement of their fans it's almost to me like a patreon if you're familiar with this platform patreon was like if you're a big social media personality like how do you engage and monetize that engagement you know from your fans and nfts are just such a better system than patreon you know if you think about it really is yeah it's Yeah. It's, I think it's going to dominate. It's so customizable. It's so creative. I think it will just dominate the way that, you know, talent engage with their fans and ultimately like, um, kind of bring utility to them. And I think it'll also become a big monetize, like a high monetizing

lane for a lot of athletes and celebrities. Yeah. I admittedly used to be one of those people who kind of hated on Tom Brady. I was not a Pats fan and I was like, that's Belichick, it's great coaching. And then you realize the guy's obviously the greatest of all time, but more importantly, he's literally all in on crypto. I mean, I don't think people realize I've spoken to other people that are close to him. It's not an act. I mean, he really is extremely passionate about this space and the coins themselves, the actual use case, the importance as an inflation hedge, but also the NFT path. And I think now we all love him. I always respected him, but I think now we all love him.

But how do you go, you know, at how did he arrive at that path? I mean, it's pretty crazy to see someone at that level, really. I mean, it's kind of risky, right? To put your reputation on the line alongside something like crypto. Yeah, probably, you know, in 2017, it would have been maybe a bigger dice roll. It's kind of hit the exit velocity, I think, at this point. You know, there's enough kind of mainstream endorsement and enough adoption where I think, at this point. There's enough mainstream endorsement and enough adoption where, I think, for the first time, I really feel like crypto has hit that exit velocity where it's just

not going anywhere. A lot of people probably thought it was dead in 2018, never to come back, and the people who were bullish at that time have done really well. But at this point, when you have people like Tom Brady jumping in, the FTX roster is pretty impressive. Incredible. Thank you, Sam. I really like the backing of a lot of companies like Crypto.com did a giant deal with one of our partners at UFC. And then they named the Lakers Stadium. They're doing all of this stuff, right? Like you can tell that they're in it for the long run making investments.

Oh, man. Yeah, it's incredible what those two companies in particular have done. It's one thing to have a patch on a team or something. It's another thing for the American Airlines Arena and the Staples Center to be rebranded with crypto names. And I agree with you. I think that haters have been left behind, obviously, but we've reached such a pitch of mainstream adoption that regardless of the price of the coins, crypto is going nowhere. I mean, it's part of now the mainstream conversation.

You'd be hard pressed to find someone who's never heard of it at this point, right? Yeah, you're really, I think, hard pressed. And for the most part, people have accounts and they're starting to get the ball rolling. I can't remember what the number was, but I saw a jaw dropping number of MetaMask downloads. It was like 50 million global MetaMask downloads, which is just crazy. I think we've hit that point where it's more about what will the future look like with regulation, with that new world order in place, but not if it will be there. I mean, crypto-based betting and gambling offshore, as we talked about, were huge.

It was one of the original, actually, probably most functional use cases of Bitcoin. Do you ever see an intersection of that in the United States? Well, to me, it's kind of a version of a black market. Like there's no regulation per se, no protection if you're using crypto casinos, but it's a decent part of, I think, what at least a few years ago, what the use cases were for crypto. And so there's a lot of things that I think we've been inspired by just seeing how, for example, certain games and innovations that have come out of crypto, being able to apply those into a regulated market,

I think has been something that certainly, you know, that I've looked at in my role. We launched a game called Rocket, for example, which is basically like you start at zero. At some point, the rocket like explodes and you have to decide when to jump off and you get like more of a multiple on your bet the longer you wait right

so if you're on it when it explodes it's kind of zero but you can get up to a thousand x if you wait and it doesn't explode right that's a game that came from you know crypto that we adopted we went through the right process to get it regulated and then we launched it in you know the u.s casino market so i think that there's a lot of inspiration that can come from maybe like a place like that and then be adopted by a regulated operator. I mean, that's exactly like tracking like the 2017 crypto bull market or any bull market, right? How long do you wait before you jump out and cash it or do you ride it all the way down to the bottom? That game sounds pretty amazing that way. And a lot of people

say that crypto is gambling. I mean, I don't agree at the core, but obviously anyone who's trading, I guess, to some degree has a bit of gambler in them. Do you see any sort of corollaries between what the products you guys are offering and maybe what crypto traders are doing? And could there be an intersection there? Yeah, I think it's like any form of investment really, where I'm sure that most people buy crypto hoping that it grows in value over time. When you buy Bitcoin or Ethereum, the thesis is like, I think that this is going to go up in time. So similar to any stock you might buy or whatever else. So I think it's certainly looked at that way. And the volatility is maybe the difference, right?

Like it can go up or down 10% in a day. It gives you a different experience than you're not typically seeing stocks go up and down 10% every day. It's just not common. So I think it gives you a more beta, more volatile type of experience. But at the end of the day,

I think everyone's hope is the same as any other investment. It goes up over time. Yeah. You obviously are far down the NFT rabbit hole. Did you ever go down the actual Bitcoin and Ethereum rabbit hole? Do you own the coins? Do you believe in them? Or are you more into the technological side and the collectible side? I literally bought my first Bitcoin this week. There was this little dip in the market where it went from, I think it was like 65K to 48. And so I bought Bitcoin at 48K. It was like my first time ever, ever entering Bitcoin. But Ethereum, I had accumulated a decent amount earlier in the year. What got me in was NFTs. Like you bought

NFTs with Ethereum. So I started by buying ETH and then buying NFTs. That's like my entry point into crypto. I'm sure I'm not alone at this point, but you know, that was what got me interested. And then now I'm much more following all of the different layer one chains, trying to figure out like how different, you know, operations are doing, trying to spread out a little bit more and learn more about the space. But yeah, it's all still pretty new to me. I've been in for eight or nine months, really just going deep. And I think that there's a decent amount of people in my same situation right now. Yeah. Six months in, they're trying to figure figure out where they want to spend their time going into 2022. Yeah, that echoes exactly what I was saying about my friends. They've kind of known about it

forever, but it was NFTs that got them excited because we all understand what it was like to collect baseball cards or to collect shoes or whatever it was when we were kids. Whatever it is about collecting, everybody, I think, has that in there. It's really a part of the human experience, I think, to want to own something that's scarce and for it to be yours. And it's interesting because all those years, we thought that Bitcoin was sort of the gateway drug into crypto, right? People would care about inflation hedge or digital gold or all these things that didn't even come close to what the NFT boom has done. But why did you finally decide to buy Bitcoin?

So I had a friend who said to me, he's like, there's only 21 million Bitcoin. And like, once it's gone, it's gone. And he's like, you could buy like X amount of Bitcoin and then you own this percent of all the Bitcoin forever. So he was kind of like pitching me on the fixed supply. And I was like, the world doesn't work on fixed supply typically right we just take out the money printer and you just make the amount that you need and then you spend it and you make more and so like i'm not sure how much the um

the fixed supply will ultimately matter but it's kind of like a different angle than than what most money looks like so it's like i want to try to try to see what that capped 21 million supply over the course of like five years, what happens as crypto adoption just grows, hopefully through the roof. So I wanted to have something in there. And then ETH is kind of my more transactional money. Like I like to buy NFTs. I like to whatever, try yield farming,

different things that are only possible on a smart contract platform. So I've been messing around with a few different things, but Bitcoin, I'm just stashing away. And I think that is how it should be approached, right? In this market, obviously, we have sort of maximalists for each thing, right? There's the people who believe that Bitcoin is everything and you should never touch anything else. What you described is how I've always approached it. You, Bitcoin, is your digital gold, your savings account, and the rest of it is sort of a tech investment, right? I mean, it's an investment in technology and you've now been going down the layer one rabbit holes, yield farming. You've really gone down this rabbit hole. I mean,

it's awesome to hear. Oh yeah, everything. Yeah. Are you buying NFTs on other chains? Yeah. So like DraftKings, we built on Polygon. So I've been getting very, very acquainted with like Polygon and like Matic's been performing really well, which is nice. Even during the recent kind of bear market. It's a funny term in crypto.

Bear markets are about, you are about 12 hours long sometimes. Polygon, Avalanche has been picking up steam and getting in a lot more of my conversations. So I think that there's going to be an interesting kind of what happens with the layer two low fee kind of stuff with transactional products like nfts over time uh we wanted to start there because we have cheap like low low cost nfts that we want to offer yeah yeah yeah we had for example like our first drop was tom brady he did 12 was the cheapest nft so you can't mint that on the ethereum you and pay $100 mint and then you get a $12 NFT because that makes no sense. So Polygon is free.

Our consumer just pays $12. It's free. And then if they want to off-ramp things onto the Ethereum blockchain, that's fine. That's something that we'll allow. But you don't want to instantly force people to hit that gas fee right away. So I think layer two is interesting on that front. Like it's much more friendly on the micro transaction. Yeah. I'm a huge polygon bull, Matic bull. It's one of my biggest positions that I've been very bullish on that for a long time.

And I knew they did that integration with you, which is amazing. And you touched on one of the most important points. When NFTs first started to really bubble, even like two years ago, gas fees were extremely cheap, right? So an artist themselves, an artist now can't afford to mint. Not only can the person not afford to buy it because it's $12 and the gas fee is a hundred, someone wants to sell something for $10 and the gas fee can be a hundred, $200. And it really priced out the artists that were supposed to be helped by this whole NFT movement. Right. It was really interesting sort of thing. Yeah. It's funny. I remember Gary Vaynerchuk, he launched VFriends, which has 10,300 NFTs. And the way that he did it was like minted them up front and then they sold right and he said it

literally cost the business over a million dollars just to mint the nfts like just to like get the product on the blockchain and that's crazy that's like an insane barrier to entry you know for almost anyone so layer two is friendly on that front. You can do it virtually free. So what made you specifically choose Polygon? Obviously, there's multiple layer two solutions, and you could have gone with Solana, Avalanche, as you touched on, and the other layer ones. Yeah, it was really two things. First, we wanted a solution that on the transaction fees, it was going to be consumer-friendly like a good entry point that we could integrate with our existing experience. So if we wanted to take, you know, low cost payments and not have onerous fees, it had to be something like a polygon. And then the second one was we

did a strategic partnership with them, which allowed us to go deeper on like a long-term relationship. So when we looked at the different options, an important factor was, you know, the idea of doing more of a strategic alliance over the long-term. And so, you know, we want to like be a validator on the platform, for example, we want to have a deeper partnership than just kind of using it.

And so that was something that we factored in was like the depth of the relationship. What's your experience been like with yield farming and DeFi since you've obviously touched on that as well? Well, it's really interesting. I think I see the appeal that multiple of these products have and mainly headlined by you'll get better returns than leaving your money in a checking account or at a traditional bank. And so for example, I saw this platform called

Liquity, which is you post LUSD, like a stable coin, and it has like a 30% return. So my first thought is like, that's a pretty good return for like low risk investment, right? And so as I learned more, I'm like, okay, you're basically taking a slightly better return to like a much better return in exchange for taking the risk that you get rugged or there's some kind of like smart contract problem or whatever. And so my take on it is put in money that you're willing to lose 100% of, like if you have any concern about that scenario, like don't even mess around with yield farming. But if you like the idea of having a potential decent return and you're okay with the risk of what if the contract has a problem or there's some kind of rug pull, then I think it's good to have some amount of your money in products like yield farms.

Have you been rugged? So not like a brutal one. No, not really. I've had things that didn't work out as well as I hoped, but I haven't had like a total pull yet. I know a lot of people though, who have had experiences like that. And it's like a real factor. I think even if you tell yourself like, I'm okay getting rugged and like, if something bad happens and it goes to zero, I'm okay. Like, I think a lot of people tell themselves that but don't really mean it. And then when it happens, they're like very unhappy.

So like really take that seriously. I think if you're messing around with these DeFi products, just have like an appropriate amount of money in them. Don't do anything that like would impact your lifestyle if it goes badly. What you just said is like something, echoes something I talk about all the time. There's that statement, never invest anything you can afford to lose. And literally

nobody on the planet almost can afford to lose the money they put into investments, right? I mean, it's such a misnomer to say, I mean, yeah, very wealthy people obviously can afford to take, but if you're a normal person and you're choosing what to invest in, it's rarely money that you can technically afford to lose, right? You might survive without it, but it's not good. Yeah. And in those cases, I would completely stay away. There's no reason to mess around. I mean, these are very new evolving platforms that are not stable often, and they have risk, like a lot of risk. Sometimes it's like 20% chance that you lose 100% of your money type of things like that's not good. Just it's not the place to play with. If that's the situation,

I would just completely stay out of it. And like, really, I know, I know people don't always take that advice. But like, really just stay away. There's no reason to put yourself in that position. Talked a lot about crypto, but do you play fantasy sports? Oh yeah, definitely. You know, we, we don't play on DraftKings. We can't play our own platform, but like I have games with my partners, we'll play one-on-one and stuff like that. And so like, yeah, I play every single week. I'm making teams, especially with football and with like golf majors and things like that. We play every single week. It's good. Actually it keeps you really close to the product,

to the experience and like stuff we were doing our whole life anyway. Yeah. I love everything that you guys are doing. Like I said, I'm a huge fan and an enthusiast. So where can everybody check you out after this conversation and also check out everything that DraftKings has. All right. I'm on Twitter. It's Matt Kalish, M-A-T-T-K-A-L-I-S-H on Twitter. That's the best place. I'm mostly on there. I'm on like a couple other platforms very scarcely. And DraftKings, you can download in the app store, DraftKings

Sportsbook. We're in, you know, over 10 states now. So the state-by-state rollout is really kicking off. Most recently, we've entered Arizona, Connecticut. New York is coming soon, if you've seen that in the news. So lots of different state expansion going on all of the time. And DraftKings Marketplace, you can download the app and jump in DraftKings Marketplace. Check out the NFTs right now from any state. So look forward to everyone checking it out. Hope you like the offer. That's awesome. Impressive that you got through in New York, because certainly for crypto and

everything else, it seems like New York is the single most difficult place on earth to get anything past the regulators. So it's very impressive, certainly for crypto. Even platforms that are available basically everywhere are generally not available in New York state. So thank you very much for taking the time. I really appreciate it. And I can't wait to actually dig into the NFT marketplace on DraftKings, which is not something that I've done yet. I'm going to go do that right now. So thanks once again for taking the time.

Thank you, Scott. See you.