So I have to imagine there’s a ton of upside there. And the other thing is, if we’re seeing natural overlap with our audience, probably many of those are still using competitor products and not us. So I think there’s also an opportunity to market more effectively to customers in our database that may still be playing OSB and iGaming, but with competitors, maybe in the Jackpocket database, I should say. So I think that’s number one. And then number two is, you’re right, absolutely, every new state that opens, this is just like DFS has been for us. We have this built-in customer base. We know that there’s tons of people around the nation that play lotteries. One of the great things about this, too, is unlike OSB and iGaming, you don’t need legislative action in most states in order to get lottery, courier lottery, digital courier lottery launch.
You need to get usually some kind of approval through the lottery director and the executive branch, but you don’t need legislative action, which makes it a much lower hurdle to get up and running in new states. And this is something, of course, that every state lottery we think would want. It’ll grow the lottery market, bring new customers in. So I think it’s a great opportunity to get a product potentially in the vast majority of US states. And you’re absolutely right. I think as time goes on, if you like us believe that more and more states will continue to launch OSB and iGaming then it’ll be the gift that keeps on giving.
Robin Farley: Okay. Thanks very much and just a follow-up in terms of your acquisition philosophy overall. Are you more likely to do things related to technology for your product, or are you looking more for things like this that have to do with customer acquisition? Thanks.
Jason Robins: I think we feel pretty good about our technology stack. I think that there may be small bolt-ons here and there that we think are helpful to enhance. But I really think it’s more about these kind of strategic moves that are going to help us win in US online gaming. And you know I think we’re going to be super disciplined on M&A. I don’t think you’ll see us go in this rash of buying companies left and right. This is one we did a ton of diligence on. We underwrote it very carefully with very conservative, I think, assumptions. And we feel like it has high potential to be a real home run. So I think you’re going to see us pursuing things like that that really make a lot of sense when you think about it. And I think you’re going to see us continue to be super disciplined and you’re going to see us look at all sorts of different ways to take the capital that we’re accumulating, create shareholder value.
This is — M&A is not the only way to do it, there are many others. So, I think that’s the best way I’d describe it. And I think it fits with how we’re disciplined in general as a company. If you look at the deals we do on the business development and partnership side, it’s the same thing. We use a lot of discretion. We’re very careful and we underwrite with a very strong analytic process and that’s exactly how we approach this M&A deal.
Robin Farley: Great. Thanks very much. Thanks.
Operator: Thank you. Our next question comes from Dan Politzer with Wells Fargo. Your line is open.
Daniel Politzer: Hey, good morning, everyone, and thanks for taking my questions. First one, just wanted to touch on structural hold. I think you guided the 10% to 10.5% for 2024, And I think that’s about 50 basis points up year-over-year versus over 200 basis points in 2023. Now, I get you’re coming off a higher base, but I guess to what extent does this reflect some degree of conservatism? And are you seeing more casual bettors come into your system just as another competitor has launched and recently you talked about growing the market there?
Jason Robins: I think, first, I’m glad that you feel that there’s some upside there. I do too. I noted this earlier, I think one of the reasons that we’re a little cautious with holes is that, there are other things you can do to improve modernization, like pushing live betting more that might actually not increase hole but still be very good from an LTV standpoint. So we want to make sure that we leave some flexibility for all sorts of different levers. And at the same time, I do think you’re right, there’s probably some upside there. Really for us, we’ve always had a nice mix of customers across the spectrum. And I do think in the last few months, there’s been more casual customers coming in, but there’s been more customers of all sorts of spend and sort of across the spectrum of spend.
So really not seeing anything tremendously different other than just really strong customer acquisition across the board, but I can’t look at it and say it’s skewing more cash flow or anything like that. It just seems like overall customer acquisition is just really strong right now.
Jason Park: I would just add Dan, our philosophy on guiding to hold rate has been that we should commit to something that we have empirically realized. So as you saw, structural hold in Q4 was better than we thought, and that gave us conviction to increase the embedded hold rate in our 2024 guide. But to Jason’s point, we’ve got a lot of work going on to improve that, but our philosophy has been only to commit to what we’ve empirically actualized.
Daniel Politzer: Got it. That’s helpful. And then just for my follow-up, you alluded to some comments in the prepared remarks on optimizing capital structure. I mean, how should we interpret that? Are you kind of referring to maybe incurring some debt and maybe long-term as you think about the company and maturing and becoming cash flow positive, how do you think about a healthy leverage ratio and what that might look like?
