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What the Supreme Court’s Sports Betting Decision Means for FanDuel’s Business

May 7, 2018, 2:34 PM UTC

All eyes are on New Jersey.

Any day now, the Supreme Court is expected to decide if the state can legalize sports betting. The court is deliberating on NCAA vs. Christie, a New Jersey case that could invalidate the Professional and Amateur Sports Protection Act, a 1992 law that bans sports betting in most states.

If the court rules in favor of the state of New Jersey, it’s likely there will be a massive chain reaction set off in state houses across the nation, allowing them to set their own policies on sports gambling. Annually, illegal sports betting amounts to an approximately $150 billion industry.

This is huge news for daily fantasy sports companies like FanDuel and DraftKings, as sports gambling could account for a big chunk of their business. Ironically enough, both companies have long argued that daily fantasy sports, in which users can win cash prizes in exchange for cash entry fees, is legal because it’s technically a game of skill, not a game of chance.

Term Sheet caught up with new FanDuel CEO Matt King to get his thoughts on the potentially historic ruling and how the company is faring after its failed merger with DraftKings. (Quick recap: DraftKings’ merger with rival FanDuel last summer unraveled over antitrust concerns, which means both companies are operating as competitors — again. I played a bizarre game of basketball with the DraftKings exec team to try and understand this. 😬)

King now faces the daunting task of not only proving that the business model is sustainable, but also that the industry can support two companies offering virtually identical products and services. King, who served as FanDuel’s CFO from 2014 to 2016, returned to the company as CEO six months ago to replace former chief executive Nigel Eccles.

FanDuel declined to comment on specifics around the company’s marketing spend and its exact daily active user numbers, but noted that revenue is up 10% year over year, active users are up 20%, and active users in the new free-to-play contests are up 60%. Here’s a glimpse of what King hopes to accomplish during his tenure:

On what he plans to prioritize as CEO: “I’ve re-focused the business on product-driven growth versus marketing-driven growth. I think it’s fair to say that if you look at daily fantasy sports as an industry, I don’t think we’ve innovated the product enough. You look at what our product was like in 2009 when we launched, what DraftKings’ products looked like when they launched in 2012, and when you look at those products today, there’s not enough change.

A lot of the focus in the category has gone into marketing, which users love, but the product wasn’t evolving. So what we’ve done is focused the organization from a strategy and resources perspective in driving product growth. Marketing will always be a core part of what we do, but that marketing should serve to enhance the product itself as opposed to it being the only way we drive user growth. That’s probably the biggest change I’ve made.”

On product changes: “We’ve probably released more new features and more new game types in the last six months than you’ve seen in the entire industry over the last two years. It’s a reframing of how we think of ourselves as a business. One of the beauties of being in a sports business is that there are about 15 big sporting events throughout the year, like the Super Bowl, the Kentucky Derby, March Madness. There’s this natural interest that’s relatively predictable each year. The reality was that we as a business were only relevant at about 4 or 5 of those 15 sporting events. So we started a product roadmap of starting new games and features that make us relevant throughout the sporting calendar.

On user growth: “The number of registered users we have is growing dramatically. People are engaging at different times of the year, and we’re accessing a broader audience out there. Users are up double digits from last year, and we’re seeing more users on the site. A number of users that we had lost have also come back.”

On new crypto prize offerings: “On the crypto side, we’ve recognized that a lot of what people play for is really around the fundamental competition dynamic. People just like to compete for stuff. They like to win. Given what’s going on in the crypto world, there’s definitely a segment of users that was very, very interested in crypto. By offering crypto as a prize, we were able to tap into something they wanted to compete for. It was a huge success for us, and there was a ton of interest.”

On what he anticipates will come out of Supreme Court ruling: “I would not venture to give you a view. All I know is that a decision has been made. It’s sitting there in an envelope somewhere, and frankly, we’re excited about the future whatever the decision is.”

On what it means for FanDuel if the court moves to legalize sports betting: “It would mean we would get into sports betting. This business is around fan engagement and helping fans feel closer to the things they like, and clearly sports betting is one way to help people to do that. So it would be very logical for us to get into it. We have some ideas of how to make that experience better and ones that we feel will resonate with our users. We think we’re uniquely positioned to fulfill that market demand.”

… And if it doesn’t: “And if it doesn’t, we’ve still got a robust roadmap of stuff without sports betting. So we’re excited about all the things we’ll launch from a product perspective, and 95% of that will be relevant no matter what happens with the Supreme Court.”

On regulation and expanding into new markets: “We’ve always looked to operate in markets where we believe we’re legal. We’ve embraced regulation. In a world not dissimilar from Uber and Airbnb where you’re creating a new market, it can be hard to know where the boundaries are. Consequently, we’ve always taken a more conservative approach to the point where we deliberately didn’t innovate in certain areas because we weren’t sure if it would be deemed acceptable.”

On how it plans to differentiate from DraftKings post-failed merger: “At the core, we want to differentiate based on simplicity. We’ve always tried to adopt an approach focused on the casual fan. To me, simplicity is the key of turning this into a business that has several million paid active users to one that has 10 to 15 million paid active users.

We need game formats that are appealing to someone who may have just 5 or 10 minutes. Frankly, one of the biggest reasons people don’t play or stop playing is that they don’t feel they have the time to do the research. We, as a category, got too obsessed with monetizing our users in the short-term and that came at the expense of building great product that every level fan can enjoy.”

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.