Richard Schwartz: I’ll take that one. I think every market, we continue to look at on a case-by-case basis, looking at all the things like the tax rates, the likelihood like iCasino being added, et cetera. It sure, it gives us some confidence to know that we are able to achieve this profitability and achieve better results in the sports-only markets. But we still are looking at each one on a case-by-case basis and monitor the opportunities in each case. And so we have been selective, and I think we’re making some really good decisions on which markets to enter and which ones not to, and we continue to evaluate them on a case-by-case basis.
Operator: Our next question comes from Dan Politzer of Wells Fargo.
Dan Politzer: Good afternoon, everyone. Thanks for all the detailed commentary. The first question, it sounds like you guys are gaining a lot of momentum and share. One, I wanted to just clarify, when you talked about gaining shares, is gross revenue, net revenue, handle. If you can just clarify there. And then what do you attribute this to? Is it product, the change in the competitive environment? And how do you see that share level evolving from here as it relates to the competitive environment may be changing in the next few months?
Kyle Sauers: Yes. Sure, Dan. I’ll just take the first part on clarifying. It’s a good point. So we’re looking at GGR when we were giving some of those share changes you don’t have net in all markets, GGR. So we felt like that’s the best way to look at that.
Richard Schwartz: Hey, Dan. The second question, share isn’t really something — it’s not a primary motivation for us. We’re trying to get to the profitability in every market, get a quick return on invested capital. But it is nice we are able to reduce marketing spend and still grow share in a time when it’s still in a very competitive marketplace, which I think does validate the quality of improvements we’ve been talking about on the product side. We just, in fact, saw report for those of you who follow it, just came out today on the sportsbook side, and we moved up a couple of spots, I think to out of 36 products in terms of the quality of the sportsbook side. So I think that’s a great example of when you combine the product with the customer service we offer and automating a bunch of features that allow us to service customers with reduced friction.
It does create a win-win for the players at us. And I think — so we do feel that our quality of our experience continues to improve. And as we bring some market, which as I’ve noted in the past, we started by doing casino innovation, and we now just started to release some of our sportsbook capabilities and the sportsbook features are working. And players really notice when you offer them something that’s unique and differentiated and high quality, and you start to get some momentum on those differentiation, features that we’re bringing to market. So those — that’s sort of the answer to your question.
Dan Politzer: Got it. And just for my follow-up, I know you mentioned that there was a lot of — you turned profitable overall for sports betting only markets. Obviously, that’s not all markets. I guess can you unpack that a little bit and let us know maybe what are some of the leaders versus laggards there? And among those laggers, do you see a path to becoming EBITDA positive in those markets over time?
Kyle Sauers: Sure. Yes, I’ll take it. I think the — I’m not going to give specifics on each market and start to break down profitability exactly by market. But I think, if you look at the markets where we have stronger revenue, bigger share and if you had a matrix of share and revenue with tax rates, that’s probably going to lead you to a pretty good answer on which ones are most likely to be profitable. And then in terms of profitability over time as sports book only markets, we do believe that all of them can get there. Some of them are going to be a little more challenging. As you can imagine, New York would be at the top of that list. But we’ve made significant improvements in New York as well. So I think they can all get there, but over varying amounts of time.
Operator: Our next question comes from Jed Kelly of Oppenheimer.
Jed Kelly: Going back to some of the success you’re having in OSB. Do you think that’s coming more from the product or is that coming from smarter bonusing you’re doing? And then I might have joined a little late. But on getting the Delaware contract, can you share with us any term anything in terms of like licensing or taxes or of a new share we should be aware of as we’re thinking about building that into our 2024 model?
Richard Schwartz: Hi, Jed, it’s Richard. I’ll take the first question and Kyle to answer the second one. As I referenced a little bit earlier, I think the product improvements on the sportsbook side are very meaningful. We’ve been talking about it for several quarters in last year, how much better the product is getting. And it’s really delivering a much better experience for the users, and we’ve been able to bring some unique features to the market. We have the squares feature, which players really talk about winning where they get in the same data with any app on the same sort of spread that with any competitor, including us. But when they bet with us, they get an extra chance to win and no extra cost up to $10,000 lottery mechanic if they’re square lands.
So just giving players something fun, something unexpected, something different, is a capability that really helps to drive some users. We’ve also made a lot of improvements in the way we market our props. The PROP CENTRAL was referenced earlier in my notes, really is having a meaningful impact on exposing really important bets that people are looking for in a much easier way. So when you combine that with customer service and all the automation we do in the customer service team, it makes a big difference. And players are noticing. And I think another big factor is that as other promotions come down in the industry and ours and others are more similar, you start to have lesser of a difference between the bonusing and you’re not having every operator bonus, if there’s an injury, an ankle turn in the first quarter, they get back to money to the players.
You’re not seeing that type of aggressive bonusing anymore. And I think that’s helping to sort of have players be more discernible about what experience they want and choosing the operators to offer them the trustworthy, reliable and high-quality experience, which is what we offer. So I think we’re continuing to gain momentum from the quality of our experience, less about being transactional-based or offering more aggressive bonuses, which is how you operate.
Kyle Sauers: And real quick, Jed, we’ve covered some of the Delaware, but just the highlights. Today, it’s about a $13 million annual run rate. So it’s going to take some time to build from there. We think there’s a lot of great things we bring to the table that are going to be able to make that a bigger market than it is but we want to be mindful that it’s a new launch for us, and it will take some time to build. We do think it won’t be a big headwind for us in terms of profitability. We can get profitable there fairly quickly. It should have gross margins that are in kind of the company average range that we have today and then contribution margins for that market should be higher as we get to profitability.
