Note: Many of the links are to the Amity Arena Library, a website devoted to the game which includes tracking the history of it through patchnotes and a running history of what cards entered and left the meta. Their website was a valuable resource for this post.

Mobile gaming has taken off like a wildfire since the advent of the smartphone boosted the average processing power a phone could carry. Initially it took the form of crossing over older, more easily runnable games onto the mobile market to... mixed success, but in recent years we've seen both the West and East use mobile gaming to replace the old fashioned movie tie in game. It's easily accessable, has a much wider reach than consoles or PC, you can take it on the go and standards are inherently lower for mobile games than they are a full 60 dollar game.
Since the 2010s, mobile gaming has shifted to what's called the "Freemium" module. The game itself is free to download and start playing, but is insideously designed with obnoxious paywalls or artificial limiters put in place to limit how much you can play each day. If the game is part of a pre-existing franchise, additional money can be made through a premium currency or a chance to obtain high-powered units by rolling a slot machine random chance mechanic. And thus, gacha gaming was born. This sub has had several threads in the past on high profile gacha games, such as the monolithic Fate Grand/Order, Pokemon Go or Genshin Impact. One of the more popular things to roll for in gachas as a consequence is wallpapers for your homescreen, especially for high-grade units as they're usually animated to move a little bit on the homescreen. Today we're looking a low to mid-tier gacha game that rose and fell with the advent of one catgirl. Let's talk RWBY.
RWBY is an online web anime made by Rooster Teeth focusing on four prospective monster hunters who get embroiled in a world-spanning shadow war. It's of debatable quality in matters of animation, combat, voice acting, story, worldbuilding, romance, and it's kind of a little racist if I'm being honest, but one of the major positives of RWBY is that the series tends to have good character design. Series creator Monty Oum set in the guidelines for the show while making it that most if not every design should be made to be cosplay friendly, hence why most of the outfits have things most costume designers haven't heard of like... pockets. And Rooster Teeth, above all else, likes making money. So they know people like RWBY's character designs, enough so that in 2017 plans were made to release a gacha game themed around RWBY called Amity Arena, which would be developed by Korean company NHN Entertainment.
Amity Arena is a PvP tower defense game. Each player controls two turrets and a tower and has three minutes to use units themed from the show to destroy the other player's structures. Whoever took out more wins, destroying a tower is an instant victory. When the game launched, it had three tiers for units- Common (generally held for mooks or low-tier characters in the show), Rare (roughly protagonist-level or elite mooks go here) and Epic (High tier characters usually with an active ability that did lots of damage or stopped enemies in their tracks). The game launched in October 2018 to generally positive reviews from both mobile game players and RWBY fans alike. Fans were happy to get a lot of new official art for the characters in the game and the base gameplay loop was fun. Criticism at the time was largely themed around the lack of content besides PVP matches and some issues with the meta but overall, the launch went well. Each month, the developers would add new units, including popular characters like Neopolitian, Cinder Fall, Zwei the dog, and more.
But everything changed with February 20th 2019, which introduced Neon Katt, the titular catgirl (RWBY characters are themed around fairytales, except for Neon, who is themed around Nyan Cat, and her partner Flynt Coal, who is themed off a potentially racist joke made by Rooster Teeth).
Neon is a character from RWBY Volume 3 who's part of a team that RWBY face during a tournament arc. Her partner, Flynt Coal, was part of the game at launch, and Neon would join him a few months later. Neon in the show is a cocky fighter who taunts the heroes and zips around on rollarskates, which in-game is represented by Neon skating towards the nearest enemy structure to her and hitting it, while all units within a radius of Neon are taunted and provoked into attacking her above all other targets unless they-selves are coded to hit structures. On its own, not a bad idea for a unit, but Neon came with four big caveats:

• Neon was the fourth corner of the square that became known as the Artillery Arena meta, which saw Neon, Cinder (who had an AOE ability she could use which was wide enough to hit a turret and tower and single-handedly killed the entire launch meta of using fragile swarm units), Zwei (an on-summon high damage AOE on any part of the map) and Penny (another AOE ability that instead did chip damage and locked a location down) turn the game's meta into a chip game. Every player ran at least one of the above cards, if only to counter the others. Neon was the universal counter in being anti-swarm and the hardest to stop, especially at launch where her taunt range was so large, it could grab units from the other lane.
  
• Neon launched with a unit weight of "Heavy", which meant that if she was behind a unit she could push it on her way to the turret. This launched a sub-meta where Neon was placed behind a larger unit such as the Ursa (which like Neon was a unit that focused on structures but was made slow to cover its tankiness), to push them towards the turret faster. This was called Disco Bear. They eventually patched this so Neon phased through units by making her a lightweight.
  
• Neon couldn't die. She was invincible until she hit a structure, which combined with her taunt meant that Neon was very annoying to fight and could lock down an entire lane of the battlefield by being placed well and taunting enemies to let you prepare a counter.
  
• Neon was a very cheap unit to summon. Amity Arena uses a mechanic called "Aura" where all units cost a certain amount and it recharges over the match- for instance, protagonist Ruby Rose has a Rare card that costs four Aura to summon, while Weiss Schnee has two rares that cost three and five. Neo only cost two Aura, which made her one of the cheapest units of the game and thus disproportionately powerful for her cost and easy to cycle through your deck so you could spam her.
  

From the word go, Neon is an unpopular unit; she's clearly overbalanced and elements such as the Disco Bear glitch have players thinking she'll have to get knocked down in a nerf- she'll either be made slower, more expensive, or able to die pre-hitting a structure, right?
Neon doesn't show up in the next patch. Instead, before she's fixed, an entire new class of units called Legendaries are introduced, and this is where the game goes full gacha. Legendaries were meant to represent the highest tier characters in the game, the ones who were either the most popular characters or the highest-tier fighters in the show. Or in some cases, the popular ships such as combo cards for White Rose (Ruby/Weiss), Bumblebee (Blake/Yang) and Flower Power (Ren/Nora). Legendaries, representing their value, were impossibly rare and had an infinitely small chance of actually appearing (The most reliable method was to buy the premium chests and hope you'd roll a Legendary, which often cost tons of money), and if you did get one, there was no way to guess which Legendary you'd actually get. Some such as White Rose and Adam were high tier units, others like Hazel or Checkmate were... kinda broken at launch. The playerbase isn't happy at this, especially as free to play players are left out in the cold and reliant on the game giving them high tier units effectively out of pity.
Neon would get a small nerf in the April patch which lessened her taunt range and killed the Disco Bear meta, but her invincibility would be left untouched, even as players submitted feedback regarding how to make it more efficient. The official Amity Arena discord has a weekly feedback section on Tuesdays where players could submit up to four suggestions on how to nerf/buff units and general requests for quality of life such as "Can this character get a new skin from this part of the show," or "Can we have an option to lower music volume that's not just muting all music?" (they never did add that second request) Neon would then remain in this state until the November patch, despite constant weekly requests for a Neon rework, and all it would do is make Neon functionally mortal, in that she had a flat shield bar of 20 that would be lowered by one for each attack before the next hit would kill her. Neon could now die... but your chances of actually doing enough damage to stop her were slim, and regardless, you were now at a serious Aura defecit.
It took seven months for this one unit to get a substantial nerf, all while the game added new units every week and the number of units being affected by patches each month began to gradually sink. To round up some of the major issues people had with Amity that developed throughout 2019 alongside Neon's general existance making life hell:

• Common units were meant to be chump fodder, but could level up the most amount of times with a level cap at 13. This meant longer-term units that had a long time to level such as the Xiong Family card, the AK-130s the Beowolf Pack, or the White Fang gunners, could become shockingly strong if players grinded the money up to reach max level.
  
• A pre-existing divide between free players and players willing to burn money IRL to get access to premium currencies led to a huge disparity in play. Free players have long complained about how hard it is to scrounge money together to level up units at higher costs as even the basic currency of Lien is hard to get large quantities of (you get a certain amount every match win but otherwise you need to burn the Schnee Premium Dust currency for the highest payouts, but SPD is also needed for shop resets, buying crates or unlocking cosmetics). The developers used to do frequent double weekends where all gains were doubled for a weekend, but these became less and less frequent as time went on. Legendaries only added to the divide, as their rarity was bad enough for players willing to spend money (one player, known as one of the largest whales in the community, in trying to get Sienna Khan, reported burning nearly nine hundred dollars on her, while taking nearly six hundred to get the Ice Flower card).
  
• One actual counter was born to fight Neon in the Argus Shield, a stationary unit that existed solely to stall units and take damage. At 2 Aura, it was the first structure to counter Neon, which allevated one of the primary problems with Neon in that no way to counter her was cost-efficient for an enemy player. They buffed the Wall to 3 Aura eventually which killed that hope, and all this happened before Neon's November nerf.
  
• The Summer of 2019 saw a large number of defensive units released; alongside the Argus Shield, several different units were released themed around turrets for the technological kingdom of Atlas, such as the Beam Turret. The Atlesian Burrow Gun was the straw that broke the camel's back and made for a miserable meta as the Burrow Gun would only appear (and be available to take damage) when a unit entered its range. These three units together were all very overpowered on launch and led to a large exodus of players sick of defensive and chip-based metas, especially as what few offensive units that were good enough to counter these metas (such as Professor Port and Adam Taurus) were often nerfed into the ground within a month of release.
  
• Also around this time it became apparent that the developers were unable to meet the quotas that Rooster Teeth was forcing on them. The social media team admitted that a certain number of units needed to be in the game in time for Winter 2019 when Volume 7 was set to start, and as the year went on more and more game-breaking bugs were being found in units, or they were at best horrifically undertuned or overpowered. The Apathy was perhaps the largest case of this, as an unfound bug pre-release meant that the Apathy (who have a passive ability that let them self-duplicate) had no cap on their power, meaning that they could immediately overwhelm defenses and in the case of some phones, be such a resource hog the phone would crash. Many Legendary units were especially guilty of being under-tuned due to low Legendary availability meaning they were simply weren't powerful enough to compare with high-levelled units. Checkmate's ability simply didn't work at launch, and Neon made several more such as Hazel Rainart a joke. May Marigold's invisibility bubble would have been an interesting game changer... were it not for a bug that made it that units placed in the bubble still played their sound lines, meaning players knew what to expect. Things were so bad that when Flower Power launched and wasn't broken or needed an emergency patch, the playerbase were shocked.
  

Unfortunately, the Novemember patch did little to stop the problems with Neon, and a new problem would rear its head for Christmas: Jinn. This unit embodied many of the problems players had: She was a Legendary so it would be hard for free players to get her, and only added to the sheer number of Legendaries that were out there. She was another structure card, and she was horrifically broken. Stopping time for seven seconds in an area around any friendly units, Jinn broke the game overnight, with players horrified at how little playtesting she'd clearly had. Most chip units now couldn't damage structures as Jinn simply could stop time and freeze the turret for the duration of the attack. And to make matters worse? She cost two Aura, meaning it was very easy to cycle a deck and start Jinn spamming.
And yet at two aura she was still one of the only cost-efficient Neon counters... until they patched her to be worth three Aura instead. Talking of the feline menace, January saw Neon get a HP nerf that set her shield at 14. Finally, Neon could be realistically be taken out, still at an Aura defecit but at least it can be countered and now they just have to raise her Aura- why are you buffing her game?
Less than a month later, Neon got, of all things, a buff. Her HP shield was set at 20, and her attacks now did double damage. This is around the point where a lot of players begin to suspect the developers aren't listening to feedback and more long-term players dip out or drop the game. Neon got touched one more time in April, which slowed her down (which itself was a problem as Neon's lessened speed on spawn simply made her better at generating aggro), she dealt 10% less damage and made it somewhat easier to hit her enough to kill her, but a new problem was on the horizon. Because Neon was now no longer the game's White Whale for patches.
Meet the White Fang Gunner Barracks. Added in September 2019, the Barracks fell under many player's radar simply because they were horrifically undertuned. Their gimmick was that every few seconds, a White Fang Gunner would spawn, with three spawning on death. In April, as Neon got her last appearance in the patches, the Barracks got a huge buff and became the centerpiece of the meta; they now spawned two Gunners, which made them immensely valuable for just five Aura. You could overwhelm many anti-swarm units before they had a chance, and shred your way through turrets.
The Barracks would then go six months before this overtuning was rectified, barring one nerf in August that lowered their health to try and stem the tide of units. To sum up every other thing that went wrong during the year meta-wise:

• The playercount was getting so low that players were able to make lists of the AI bots the developers had in place so lower-level players had a challenge (Amity breaks up players by a trophy system where you gain trophies with every win, and by this point most of the active players were in the 2500 to 3500 range. This also meant new players steamrolled through the lower levels only to hit a brick wall in the 3000 range, with the only reliable solution being to willingly lose matches until you were in your optimal range and grind victories until you reached a certain level.
  
• The patches became more and more threadbare, going from 8+ units getting changed each month in early 2019 to three units at most getting changed in 2020 patches outside of the anniversary patch going back to the golden days of eight. The only area where they didn't get more threadbare was in the cosmetics and emotes that the developers were cranking out, all of which were only available through hours of grinding or premium currencies. This was despite the fact that the units were being released slower, going from once a week to once a fortnite.
  
• The majority of units added in 2020 were Epic or Legendary tier, which were the hardest to get for free players unless they got lucky and they were added to the store (and if they had the lien as a Legendary in the store costs a flat 40,000 Lien). One Common and four Epics were released compared to twelve Epics and seven Legendaries. The release of Moonslice Adam especially was annoying for this regard, as Adam already had a Legendary released (at least for Team RWBY, each of them headlined a Legendary when it came to the team attack cards), and this was clearly done to pander to Adam's fans again as his first unit saw a spike in interest in the game. The math was done and showed how artifically scarce Legendaries were made.
  
• The undeovertuning was still in play. Colossus is seen as one of the worst cards in the entire game because of its gimmick. I have literally never seen anyone play it. Flynt became overtuned and now he's a staple thanks to his trumpet's AOE attack being able to hurt turrets and shred most units. Launcher Nora was an especially overtuned unit thanks to her high-damage constant AOE barrage and long range meaning she could annhilate most anything if given enough cover. Even after patches she's still dangerous. September saw the White Fang Dropship Formation added, which was widely seen as a terrible unit and done as an emergency addition because the planned unit for September in the Grimm Seer had to be cut last minute for technical reasons.
  
• The game has barely had significant content added since launch, with the primary gameplay still just being PVP. Barring Battle of Beacon (a mode where you can play as Ruby and Weiss and fend off Grimm which most players just use to grind chests, and no, they still haven't added Blake or Yang) and Plaza (a lobby where you can dress up as a character and run around Beacon), the game has added no new features and quality of life content players have requested since launch (rerolling in the shop, Superior Crates having guaranteed Legendary spawn rates) have been released at a snail's pace (you still can't reroll Legendaries if you're looking for a specific unit). Academies where players can unite to trade units and chat still lacks features that have been requested for years such as the ability to delete messages. And Plaza immediately went to hell because players were doing erotic role play in the chats and after people came forward with proof that minors were being sexually harassed in the Plaza or being coerced into side-channels, the dev response was to... just turn off the chat entirely instead of banning the accounts or implementing moderation. This also removed the chatlog which deleted a lot of the evidence of said harassment.
  

As OctobeNovember comes in, the players are getting more and more furious. The weekly feedback includes a near constant demand for an acknowledgement from the developers given how often it feels like the feedback is being ignored. The social media team get caught several times hyping up how the coming patch would address player concerns, only for said patch to lack those units. The meta has been locked down to the Xiong Family, Flynt, Launcher Nora, Spider-Mines and the hell-cat herself in Neon. Everyone runs at least one of these, people run meta decks not because they want to, but because it's the only way to have a chance of victory.
And then in December, things implode. The patch for the month was set to launch on December 10th with the monthly event missions. But when the clock rolls around, the event missions (which usually take about two weeks to do if you're doing as many as you can a day)... has a six day timer. And the update doesn't come out. The art team doesn't release new unit art. The shop has no special timed bundles. There's no patch notes. And then the Twitter team who've been hard carrying the game through... actually talking to the players and acknowledging the grievances they have... admitted that they don't know what's going on either. The best guess is that the devs have come down with Covid, but no statements to confirm or deny this leave it as guesswork. The timer eventually got reset and people could do the event, but then on Christmas itself, another issue.
Ruby has appeared in the plaza on Halloween (her canonical birthday) and Christmas, and if you go talk to her you get free stuff. But on Christmas people, people discovered that Ruby was talking as if you'd already talked to her. Because they hadn't updated Ruby yet for 2020. She still thought it was 2019 so if you'd talked to her then for goodies, she had none now. They patched it eventually but a lot of people didn't see this fix before the timer ran out to get the free stuff.
Some have resorted to memes to cope with the fact that the game just seems to have died out of the blue. Others have been trying to desperately rally the players and find a way to save it. Some resorted to friendly mockery of the whales who'd spent thousands on a game that seems to be dying (seriously though gacha games need to curb this shit but they won't because whales are godsends for their bank balances).
If the game doesn't get an update in January then two months without new content will mark the end, and the already significant playercount drops will only increase. And it's hard to say if any one thing could have turned Amity Arena's fate around beyond just "Have a better balancing team who can respond better to feedback." Neon began the time of death, but by the time December rolled around the meta was in a horrifically toxic place where if you wanted to make any progession, you had to get down and dirty with the pigs. The team just constantly failed to balance problem units outside of their emergency hotfixes of Jinn, and more often then not they went after units and buffed or nerfed them at random going off playcounts to determine what needed fixing instead of the actual written feedback they were getting. It's clear from the references to the show and some of the attempts to reach out to the community that at least one person in the team genuinely wanted to make the good appealing to RWBY fans, but somewhere during the game's lifespan, they lost their way. Less focus needed to be put on how to milk the players, and instead focusing on making a game sustainable and enjoyable enough to warrant the cosmetics and emotes. The game's failure ultimately isn't on the playerbase. It's on the people who were actually making the game who chose to slack off because they thought it acceptable to do so.
Thanks for reading.
EDIT: HOT OFF THE PRESSES, I JUMPED THE GUN
Had I waited one more day, my story would have had a far more sudden ending, as the game just announced its shutdown for January.
RIP.

TL:DR

• This is Part 1 of my two part deep dive on DraftKings (Ticker: DKNG, I will refer to the company as “DK”)
• This first part introduces you to (1) me, (2) the company, (3) my thesis on the company, and (4) digs into how they make money.
• The second part (already released, you can read it here - but get through part 1 first :) ) will go in depth to explore the question “Can we 10x from here?”
• DK is an exciting, disruptive company working to change how we experience watching sports and make it better.
• I am not a financial advisor and this is not investment advice. These are just my opinions to help facilitate learning and discussion.

Hello, welcome to my first deep dive write up.
My name’s Mark and I’m an accountant with a passion for investing. About two years ago, I used to work as an auditor at a public accounting firm and have been behind the scenes at many different publicly traded and privately held companies in the U.S. My goal is to bring my unique perspective from that past experience, my current experience working in a new role at a large corporation, and my understanding of accounting to help break down some of the most exciting growth stocks on the market today.
I’m a long-term investor. I am focused on finding great companies and holding them for a long time. I’m willing to endure volatility, crazy price drops, and everything that comes with this approach as long as the facts that led me to originally invest and believe in that company have not changed. If you want to learn more about this approach. I recommend reading the book “100 Baggers” by Chris Mayer.
Introduction
I think it’s fitting that my first stock pick has to do with sports. Sports has been a part of my life since I could walk at the age of 2. First with baseball and soccer, and then later in my childhood with golf. I’ve always played American football and basketball for fun as well and have always been an avid fan of all the major sports in the US.
I started playing fantasy sports (mostly just fantasy football) about 6 years ago and have always enjoyed it. Traditionally, with fantasy football you draft a team at the beginning of the year and those are your players for the rest of the season. If you have a bad draft, oh well. You can try to improve your team with trades and free agent additions but it is tough. Leagues usually consist of 10-14 teams (each managed by an individual) and there’s obviously only one winner at the end of the season (about 4 months after the draft). This can lead to the managers of the lower performing teams losing interest as the season wanes on. I believe DraftKings’ (DK) founders saw this issue and saw an opportunity. Enter, daily fantasy sports. Now, with the DK platform you can draft a new team every week. Or if you want, every day. This allows fans of fantasy sports to engage at whichever point of the season they want and at varying financial stakes.
The Thesis Statement
For every stock pick I make, I want to provide a quick thesis statement that can serve as a reminder for why I’m buying and holding that stock for the long term. I’ll always aim to make it just a few sentences long so it can easily be remembered and internalized. This helps during times when the price may sporadically drop and you need to remember why you’re holding this position.
The thesis statement I have come up with for DK is as follows:
“DraftKings: The leader in allowing fans to engage financially with their favorite sports, teams, and players. Having money at stake makes the game a lot more interesting to watch. The era of daily fantasy sports games, online sports betting, and online betting (outside of sports), is just getting started and DK is as well positioned (or better positioned) than anyone to capitalize off of this trend.”
Notice how I said “allowing fans to engage financially” as the first sentence and not necessarily “allowing fans to gamble”. There’s a reason for that. According to US Federal Law, Daily Fantasy Sports (DFS) contests have specifically been exempted from the prohibitions of the Unlawful Internet Gambling Enforcement Act (UIGEA). DK has always been, and I believe will continue to be DFS contests 1st, sports betting 2nd, and other forms of gambling/entertainment 3rd. It is noteworthy that states at an individual level can still deem DFS contests illegal if they so wish, but as of this writing (11/26/20), 43 of the 50 US States allow DFS contests and DK, accordingly, is offering DFS contests in all 43 of those US States.
I’ll try to clarify the difference between DFS contests and sports betting real quick:
DFS Contest – Pay a pre-set entry fee to enter a contest. All entry fees go towards “The Pot”. “Draft” 9 players to be on your “Team” for 1 week. Enter your “Roster” into a contest with other players (could range from 1 other person to 1,000s of people, the DK user can choose). Whichever “Roster” amasses the most points for that week out of all contestants wins. The winner will get the highest payout, and depending on the nature of the contest, other top finishers will receive smaller payouts as well.
Sports Gambling – Team A is considered a 10 point favorite to defeat Team B. This means that Team A is expected, by the professional gambling line setters, to outscore Team B by 10 points. This is known as a point spread. You can bet on the underdog or the favorite. If you bet on the favorite, they have to win by more than 10 points for you to win the bet. If you bet on the underdog, you will win the bet as long as the underdog keeps the game within less than a 10 point defeat.
These are just a couple simple examples to help you see the difference. Sports Gambling (the 2nd priority of DK) is a very lucrative market just as the DFS contests are. However, in the US, Federal Laws and regulations are a lot stricter on Sports Gambling than they are on DFS. As of this writing (11/27/20), 22 states (including the District of Columbia) out of 51 possible allow sports gambling.
DK is still in the infancy stages of getting their sports gambling business going. In the 22 states where they could potentially operate, they currently have a sports gambling offering in 11 of those states. The sports gambling business model for DK can be broken into two main offerings – mobile sports betting, and retail sports betting. Mobile sports betting means you can place a sports bet online from the comfort of your own home, while retail sports betting means you must go to a casino and place a bet with the sportsbook in person. I personally believe mobile sports betting is the real potential cash cow for DK out of the two types of sports betting offerings due to the convenience and ease of access. DK is currently working on and encouraging customers to lobby their state lawmakers to legalize sports gambling in more states.
How DK makes money
At the very least, before you invest in a company, you better understand how they make money. In Chris Mayers’ excellent book, 100 Baggers, that I mentioned above, he continually references top line revenue growth as one of the main common indicators of a possible 100 Bagger. This isn’t to tell you that any stock I pick will be a 100 Bagger just because it has great top line revenue growth, but if I am looking at a growth stock to hold for the long term, revenue growth is one of the first things I look at.
For DK, their means of making money is quite simple. I already went into detail above about DFS Contests and Sports Gambling. In DK’s latest 10-Q filing with the SEC (filed 11/13/20), revenue is broken out into two main streams: Online Gaming and Gaming Software.
Online Gaming (82% of Total Revenue for 9 months ended 9/30/20):
Online gaming is the true core business of DK and includes the aforementioned DFS Contests, Sports Gambling and additional gambling (non-sports) opportunities. DK refers to their additional gambling (non-sports) as “iGaming” or “online casino”.
For the 9 months ended 9/30/20, Online Gaming revenue totaled $239M, up 30% YoY from $184M in the same prior year period. Keep in mind, that this is an increase that happened during a COVID-19 global pandemic that delayed and shortened many professional sports seasons.
Online gaming revenue is earned in a few ways that are slightly different, but very similar overall. In order to enter a DFS contest, a customer must pay an entry fee. DFS revenue is generated from these entry fees collected, net of prize payouts and customer incentives awarded to users. In order to place a sports bet (sports gambling), a customer places a wager with a DK Sportsbook. The DK Sportsbook sets odds for each wager that builds in a theoretical margin allowing DK to profit. Sports gambling revenue is generated from wagers collected from customers, net of payouts and incentives awarded to winning customers. The last form of online gaming revenue is earned in similar fashion to a land-based casino, offering online versions of casino games such as blackjack, roulette, and slot machines.
Gaming Software (18% of Total Revenue for 9 months ended 9/30/20):
While the Online Gaming revenue stream mentioned above is a Business to Consumer (B2C) model, the Gaming Software revenue stream is a Business to Business (B2B) model. The Gaming Software side of the business was born out of the acquisition of SBTech, a company from the Isle of Man (near the UK) founded in 2007 that has 12+ years of experience providing online sports betting platforms to clients all over the world. The acquisition occurred as part of the SPAC driven IPO in April of 2020 that combined “the old DK company” with SBTech so that they now are “the new DK company” listed as DKNG on the NASDAQ. SBTech is a far more important part of the story than just being 18% of today’s revenue. The reason for this is because DK will eventually (planned mid-late 2021) be migrating all of their DFS and gambling offerings onto SBTech’s online platforms. Currently, for DFS, DK uses their own proprietary platform but that will move to SBTech with the migration. Currently, for online gambling, DK uses Kambi, the same online gambling platform that services Penn Gaming (PENN), a DK rival. But that’s enough about the software migration for now, back to the Gaming Software revenue.
The Gaming Software revenue stream for DK is essentially a continuation of SBTechs’ B2B business model. DK contracts with business customers to provide sports and casino betting software solutions. DK typically enters two different type of arrangements with B2B customers when selling the gaming software:

1. Direct Customer Contract Revenue: In this type of transaction, the software is sold directly to a business (casino for example) that wants to use the software for their own gambling operations. This revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using DK’s software and is recognized in the periods in which those wagering and related activities conclude.
2. Reseller Arrangement Revenue: In this type of transaction, DK provides distributors with the right to resell DK’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses DK’s software.

As mentioned above, SBTech was an international company based in the Isle of Man before being acquired by DK. Thus, the majority of their business in their first 12 years of operating independently has always been international and outside of the United States. This has helped DK, which has historically been US focused, expand it’s international reach.
A perfect example of expanding this international reach occurred recently during October (technically Q4) in which DK’s B2B technology (powered by SBTech) helped enable the launch of “PalaceBet”, a new mobile and online sportsbook offering from Peermont, a South Africa based resort and casino company. The deal was headed by DK’s new Chief International Officer, Shay Berka, who previously spent 10 years working for SBTech as CFO and General Manager. Mr. Berka took on the role of DK’s Chief International Officer upon the merger in April earlier this year. I think this deal shows that DK has integrated SBTech and it’s business very well into the larger business as a whole. They are not wasting any time using their newly acquired resources to expand their reach and bring in new sources of revenue.
This is the end of my first article about DK. My goal is to drop Part 2 later this week. The focus of Part 2 will be an in depth answer of the question – “Can we 10x from here?”
Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

TL:DR

• This is Part 1 of my two part deep dive on DraftKings (Ticker: DKNG, I will refer to the company as “DK”)
• This first part introduces you to (1) me, (2) the company, (3) my thesis on the company, and (4) digs into how they make money.
• The second part (to be released later this week) will go in depth to explore the question “Can we 10x from here?”
• DK is an exciting, disruptive company working to change how we experience watching sports and make it better.
• I am not a financial advisor and this is not investment advice. These are just my opinions to help facilitate learning and discussion.

Hello, welcome to my first deep dive write up.
My name’s Mark and I’m an accountant with a passion for investing. About two years ago, I used to work as an auditor at a public accounting firm and have been behind the scenes at many different publicly traded and privately held companies in the U.S. My goal is to bring my unique perspective from that past experience, my current experience working in a new role at a large corporation, and my understanding of accounting to help break down some of the most exciting growth stocks on the market today.
I’m a long-term investor. I am focused on finding great companies and holding them for a long time. I’m willing to endure volatility, crazy price drops, and everything that comes with this approach as long as the facts that led me to originally invest and believe in that company have not changed. If you want to learn more about this approach. I recommend reading the book “100 Baggers” by Chris Mayer.
Introduction
I think it’s fitting that my first stock pick has to do with sports. Sports has been a part of my life since I could walk at the age of 2. First with baseball and soccer, and then later in my childhood with golf. I’ve always played American football and basketball for fun as well and have always been an avid fan of all the major sports in the US.
I started playing fantasy sports (mostly just fantasy football) about 6 years ago and have always enjoyed it. Traditionally, with fantasy football you draft a team at the beginning of the year and those are your players for the rest of the season. If you have a bad draft, oh well. You can try to improve your team with trades and free agent additions but it is tough. Leagues usually consist of 10-14 teams (each managed by an individual) and there’s obviously only one winner at the end of the season (about 4 months after the draft). This can lead to the managers of the lower performing teams losing interest as the season wanes on. I believe DraftKings’ (DK) founders saw this issue and saw an opportunity. Enter, daily fantasy sports. Now, with the DK platform you can draft a new team every week. Or if you want, every day. This allows fans of fantasy sports to engage at whichever point of the season they want and at varying financial stakes.
The Thesis Statement
For every stock pick I make, I want to provide a quick thesis statement that can serve as a reminder for why I’m buying and holding that stock for the long term. I’ll always aim to make it just a few sentences long so it can easily be remembered and internalized. This helps during times when the price may sporadically drop and you need to remember why you’re holding this position.
The thesis statement I have come up with for DK is as follows:
“DraftKings: The leader in allowing fans to engage financially with their favorite sports, teams, and players. Having money at stake makes the game a lot more interesting to watch. The era of daily fantasy sports games, online sports betting, and online betting (outside of sports), is just getting started and DK is as well positioned (or better positioned) than anyone to capitalize off of this trend.”
Notice how I said “allowing fans to engage financially” as the first sentence and not necessarily “allowing fans to gamble”. There’s a reason for that. According to US Federal Law, Daily Fantasy Sports (DFS) contests have specifically been exempted from the prohibitions of the Unlawful Internet Gambling Enforcement Act (UIGEA). DK has always been, and I believe will continue to be DFS contests 1st, sports betting 2nd, and other forms of gambling/entertainment 3rd. It is noteworthy that states at an individual level can still deem DFS contests illegal if they so wish, but as of this writing (11/26/20), 43 of the 50 US States allow DFS contests and DK, accordingly, is offering DFS contests in all 43 of those US States.
I’ll try to clarify the difference between DFS contests and sports betting real quick:
DFS Contest – Pay a pre-set entry fee to enter a contest. All entry fees go towards “The Pot”. “Draft” 9 players to be on your “Team” for 1 week. Enter your “Roster” into a contest with other players (could range from 1 other person to 1,000s of people, the DK user can choose). Whichever “Roster” amasses the most points for that week out of all contestants wins. The winner will get the highest payout, and depending on the nature of the contest, other top finishers will receive smaller payouts as well.
Sports Gambling – Team A is considered a 10 point favorite to defeat Team B. This means that Team A is expected, by the professional gambling line setters, to outscore Team B by 10 points. This is known as a point spread. You can bet on the underdog or the favorite. If you bet on the favorite, they have to win by more than 10 points for you to win the bet. If you bet on the underdog, you will win the bet as long as the underdog keeps the game within less than a 10 point defeat.
These are just a couple simple examples to help you see the difference. Sports Gambling (the 2nd priority of DK) is a very lucrative market just as the DFS contests are. However, in the US, Federal Laws and regulations are a lot stricter on Sports Gambling than they are on DFS. As of this writing (11/27/20), 22 states (including the District of Columbia) out of 51 possible allow sports gambling.
DK is still in the infancy stages of getting their sports gambling business going. In the 22 states where they could potentially operate, they currently have a sports gambling offering in 11 of those states. The sports gambling business model for DK can be broken into two main offerings – mobile sports betting, and retail sports betting. Mobile sports betting means you can place a sports bet online from the comfort of your own home, while retail sports betting means you must go to a casino and place a bet with the sportsbook in person. I personally believe mobile sports betting is the real potential cash cow for DK out of the two types of sports betting offerings due to the convenience and ease of access. DK is currently working on and encouraging customers to lobby their state lawmakers to legalize sports gambling in more states.
How DK makes money
At the very least, before you invest in a company, you better understand how they make money. In Chris Mayers’ excellent book, 100 Baggers, that I mentioned above, he continually references top line revenue growth as one of the main common indicators of a possible 100 Bagger. This isn’t to tell you that any stock I pick will be a 100 Bagger just because it has great top line revenue growth, but if I am looking at a growth stock to hold for the long term, revenue growth is one of the first things I look at.
For DK, their means of making money is quite simple. I already went into detail above about DFS Contests and Sports Gambling. In DK’s latest 10-Q filing with the SEC (filed 11/13/20), revenue is broken out into two main streams: Online Gaming and Gaming Software.
Online Gaming (82% of Total Revenue for 9 months ended 9/30/20):
Online gaming is the true core business of DK and includes the aforementioned DFS Contests, Sports Gambling and additional gambling (non-sports) opportunities. DK refers to their additional gambling (non-sports) as “iGaming” or “online casino”.
For the 9 months ended 9/30/20, Online Gaming revenue totaled $239M, up 30% YoY from $184M in the same prior year period. Keep in mind, that this is an increase that happened during a COVID-19 global pandemic that delayed and shortened many professional sports seasons.
Online gaming revenue is earned in a few ways that are slightly different, but very similar overall. In order to enter a DFS contest, a customer must pay an entry fee. DFS revenue is generated from these entry fees collected, net of prize payouts and customer incentives awarded to users. In order to place a sports bet (sports gambling), a customer places a wager with a DK Sportsbook. The DK Sportsbook sets odds for each wager that builds in a theoretical margin allowing DK to profit. Sports gambling revenue is generated from wagers collected from customers, net of payouts and incentives awarded to winning customers. The last form of online gaming revenue is earned in similar fashion to a land-based casino, offering online versions of casino games such as blackjack, roulette, and slot machines.
Gaming Software (18% of Total Revenue for 9 months ended 9/30/20):
While the Online Gaming revenue stream mentioned above is a Business to Consumer (B2C) model, the Gaming Software revenue stream is a Business to Business (B2B) model. The Gaming Software side of the business was born out of the acquisition of SBTech, a company from the Isle of Man (near the UK) founded in 2007 that has 12+ years of experience providing online sports betting platforms to clients all over the world. The acquisition occurred as part of the SPAC driven IPO in April of 2020 that combined “the old DK company” with SBTech so that they now are “the new DK company” listed as DKNG on the NASDAQ. SBTech is a far more important part of the story than just being 18% of today’s revenue. The reason for this is because DK will eventually (planned mid-late 2021) be migrating all of their DFS and gambling offerings onto SBTech’s online platforms. Currently, for DFS, DK uses their own proprietary platform but that will move to SBTech with the migration. Currently, for online gambling, DK uses Kambi, the same online gambling platform that services Penn Gaming (PENN), a DK rival. But that’s enough about the software migration for now, back to the Gaming Software revenue.
The Gaming Software revenue stream for DK is essentially a continuation of SBTechs’ B2B business model. DK contracts with business customers to provide sports and casino betting software solutions. DK typically enters two different type of arrangements with B2B customers when selling the gaming software:
​

1. Direct Customer Contract Revenue: In this type of transaction, the software is sold directly to a business (casino for example) that wants to use the software for their own gambling operations. This revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using DK’s software and is recognized in the periods in which those wagering and related activities conclude.
2. Reseller Arrangement Revenue: In this type of transaction, DK provides distributors with the right to resell DK’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses DK’s software.

As mentioned above, SBTech was an international company based in the Isle of Man before being acquired by DK. Thus, the majority of their business in their first 12 years of operating independently has always been international and outside of the United States. This has helped DK, which has historically been US focused, expand it’s international reach.
A perfect example of expanding this international reach occurred recently during October (technically Q4) in which DK’s B2B technology (powered by SBTech) helped enable the launch of “PalaceBet”, a new mobile and online sportsbook offering from Peermont, a South Africa based resort and casino company. The deal was headed by DK’s new Chief International Officer, Shay Berka, who previously spent 10 years working for SBTech as CFO and General Manager. Mr. Berka took on the role of DK’s Chief International Officer upon the merger in April earlier this year. I think this deal shows that DK has integrated SBTech and it’s business very well into the larger business as a whole. They are not wasting any time using their newly acquired resources to expand their reach and bring in new sources of revenue.
This is the end of my first article about DK. My goal is to drop Part 2 later this week. The focus of Part 2 will be an in depth answer of the question – “Can we 10x from here?”
Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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Paytable Unlocks the Norse Code

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Hey guys, I'm Jake AKA jackofspadesman. I've been into competitive Pokémon since late 2007 and started playing VGC in late 2014. My career isn't the most decorated in that time, but I'm always on the look out to help new players learn VGC and share my passion for it. With that, I've been writing a guide of sorts to assist newer VGC players get into the game, avoid common mistakes, and improve as a whole. As someone who started as a Smogon Singles player, I hope my advice can be of some use to you to succeed at VGC!
Primer
What is VGC?
Pokémon VGC stands for the Video Game Championships. It is the official competitive Play! Pokémon format for Pokémon battling in the video game series and is led by The Pokémon Company International (TPCi) in most countries.
What are the main rules of VGC?
VGC is a Doubles format with all Pokémon set to Level 50, whether they’re actually higher or lower level. You are allowed a team of six different Pokémon (differentiated by their Pokédex number) that all must carry unique items from one another (or no item if you so choose), also known as the Item Clause, that may not change at all during the course of the tournament. When starting a battle, you see your opponent’s team in team preview and must choose only four Pokémon to take into that game; this is commonly known as bring 6 take 4.
A comprehensive set of rules can be found linked on this page: https://www.pokemon.com/us/play-pokemon/about/tournaments-rules-and-resources/
When does the legal Pokémon list change?
VGC formats usually change at the beginning of each year with a new set of rules making different species of Pokémon legal for use. However, in recent years, we’ve been seeing formats change every few months with the release of different in-game Gigantamax events and the release of DLC.
Where can I play VGC?
When it comes to VGC, there are five major ways to play that stand out: official events, community-run tournaments, in-game Battle Stadium Doubles, against your friends online using the Battle Stadium Doubles rules on Y-Comm, and Pokémon Showdown.
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Differences from Singles
At a glance
As mentioned earlier, VGC is played as “bring 6 pick 4” Double Battles, where every Pokémon on the team of 6 holds a different item.
Tiers?
Unlike Smogon, VGC does not have any tiering system that permits or bans any Pokémon from the legal list from being used; throughout a format, the Pokémon on the legal list will always stay legal.
Battles are quick
Because each player has two Pokémon on the field at a time and only four Pokémon each, battles move a lot faster than Singles. Battles often last only 8-12 turns, compared to the multi-dozen or even triple digit turn long Single Battles.
Spread moves
Spread moves (moves that hit more than one target) are unique from Singles, not because those moves don’t exist but because there are no additional targets to hit! Some moves, like Earthquake and Surf, hit all other Pokémon on the field; other moves, like Rock Slide and Heat Wave, hit both opponents without threatening the user’s partner. In either case, when spread moves are used and multiple targets exist, they will only do 75% of the damage they’d do when only one target exists.
Doubles Dedicated Moves
If you’re a Singles player, you’ve probably come across moves that are less than ideal for Singles or sometimes have no function at all. Moves such as Helping Hand, Follow Me, Rage Powder, Ally Switch, Wide Guard, Quick Guard, and Heal Pulse are moves designed with Double Battles in mind. These moves are staples on supportive Pokémon to aid their partners with a multitude of effects. If you see a Pokémon in VGC that isn’t doing much on the offensive side, chances are it’s using one of these supportive options to gain the upper hand.
Another great move with Doubles in mind is the move Fake Out. While not unheard of in Singles for some free damage, Fake Out takes on a whole new role in Double Battles. By flinching the target of the attack, it can allow the Pokémon’s partner a chance to use a set up move like Dragon Dance, a speed control move like Trick Room, or simply deal with a threatening Pokémon before it has a chance to move. Be warned though - some Pokémon have abilities that make them immune to flinching and Dynamax Pokémon cannot flinch at all!
Choosing items wisely
With the concept of item clause, you often have to get creative with your item choices which can ultimately affect what Pokémon can end up on your team. So what items are good? Like Singles, items like Life Orb, Focus Sash, Assault Vest, and Lum Berry are all great options due to the nature of the speed of Double Battles and needing to make the most of a Pokémon’s relatively short time on the field. However, some items frequently don’t make the cut for this very same reason, such as Leftovers and Black Sludge. Due to the lack of entry hazards, the Heavy-Duty Boots are also a wasted item slot.
The Choice items are another great item to talk about during a time when Dynamax exists. The Choice accessories, while generally great on the right Pokémon, do not take effect when a Pokémon has Dynamaxed which essentially makes them itemless.
So what items work in VGC that don’t make it much in Singles? To replace Leftovers, Pokémon will often carry health-restoring berries, such as Sitrus Berry or Iapapa Berry, which restore a larger amount of HP immediately without the restriction of their recovery being gradual over many turns. People also will use type resistance berries like Coba Berry to halve the damage from super-effective flying-type attacks or Shuca Berry to mitigate damage from super-effective ground-type attacks so Pokémon can survive even just one turn longer to perform their functions. Because of the Dynamax mechanic doubling a Pokémon’s HP, Weakness Policy has become a favored item in VGC allowing Pokémon to use this newfound bulk to survive a super-effective attack and fire back harder. Oftentimes, a Weakness Policy is able to be activated by a partner Pokémon on a team, like a Mimikyu with Shadow Sneak targeting its partner Dragapult. With the popularity of Pokémon such as Amoonguss and Venusaur, Safety Goggles are also a great pick to prevent Spore and Sleep Powder, as well as ignore Rage Powder's redirection.
Entry Hazards
Double Battles tend to have less switching for advantageous positioning due to their faster pacing, rendering entry hazards such as Stealth Rock and Spikes irrelevant. For this reason, you don’t see them used in VGC often and never at a high level of play.
Stall
A common strategy seen in Singles is known as stalling. Bulky Pokémon that can use Toxic and recovery moves while taking little damage from their opponents allows them to take a slow approach to beating their opponent. In VGC however, having two Pokémon that can attack, as well as the looming timers, usually shuts down these types of strategies.
Baton Pass
While Baton Pass has been banned in modern Smogon metagames, it’s perfectly legal in VGC like every other move. Although it’s seen some success, primarily in 2017 with the use of Eevee’s signature Z-Move Extreme Evoboost, it often just puts a target on your Pokémon to be dogpiled by the opposing Pokémon’s attacks. With Taunt, Haze, and Clear Smog present more than ever, it’s hard to justify using at all.
Sleep
In Smogon metagames, the use of moves that put Pokémon to sleep are held back by what's known as the Sleep Clause. This is an enforced rule (and one built into Pokémon Showdown) that prevents a player from putting more than one of the opponent's Pokémon to sleep. In VGC, there is no rule against how many Pokémon you can put to sleep, so Pokémon such as Amoonguss and Venusaur are extremely common to prevent one's opponent from taking any turns at all. Be sure to always have good countermeasures to avoid getting put to sleep, whether it be Taunt, Electric or Misty Terrain setters, Lum Berry, or Safety Goggles to prevent Sleep PowdeSpore.
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Key Strategies
Protect
In order to outplay your opponent, it’s often necessary to protect your Pokémon from harm while their partner deals with the Pokémon threatening a KO on them, which brings in the move Protect (and likewise, Detect). It’s also useful for other things such as not taking damage from a spread move, preventing your opponent from gaining momentum with Fake Out, or stalling out weather, Trick Room, Tailwind, Terrain, and Dynamax.
When Dynamaxed, any non-attacking move will turn into Max Guard, which is a beefed up version of protect that prevents all damage from max moves (besides Gigantamax Urshifu’s) and even blocks the move Feint, which normally breaks protection. Some popular Dynamax Pokémon will opt to not use Protect and instead use a set up move so they can buff their stats, maximize their offensive options with three attacks, and utilize Max Guard while Dynamaxed so they’re not fully vulnerable.
Intimidate
Intimidate is an ability that lowers both opposing Pokémon’s attack stat by one stage and it has dominated VGC since its inception. By lowering your opponent’s physical offensive presence simply by sending a Pokémon on the field makes it attractive to use on your team in order to hinder your opponent and boost the survivability of your own Pokémon. While most physical attackers see Intimidate as a thorn in their side and most special attackers are completely unphased by it, some Pokémon thrive off of the thrill of being intimidated. Pokémon with the ability Defiant, such as Bisharp and Braviary, and others with the ability Competitive, such as Milotic and some Gothitelle, will get a +2 boost to their Attack or Special Attack respectively as a countermeasure to fend off intimidators.
Speed Control
In Singles, moves that control the speed on the field like Trick Room and Tailwind are seldom seen because the user will be the one who has to try to utilize that time. In VGC, however, these moves, in addition to moves like Icy Wind and Electroweb, are seen on nearly every team. While a more threatening, offensive Pokémon can keep attacking, their partner is able to use these speed control moves. These few turns of Tailwind and Trick Room are also more suited to VGC because of how impactful those turns are in a shorter match. On top of moves, weather activated speed-boosting abilities, Chlorophyll, Swift Swim, Slush Rush, and Sand Rush, are all fantastic methods of pseudo-speed control.
In generation 8 in particular, these speed control tactics excel due to the mechanical change of real-time speed changes. In the past, if Tailwind went into effect at the beginning of the turn, it would not benefit the Pokémon affected by it until the next turn. However, each speed check is now made before each Pokémon moves making them able to benefit from Tailwind the same turn it is used and the drops from Icy Wind and the like also take effect immediately. This effect is also shared by the weather activated abilities allowing for a Pokémon with a weather setting ability to switch in and benefit its partner immediately.
Prankster
Pokémon with the ability Prankster are able to use Status category moves at a priority of +1 which is utilized heavily by VGC players when compared to Singles players. With Prankster, Pokémon like Whimsicott and Grimmsnarl are able to impact the flow of the game with their speedy support moves. Common moves used by Prankster Pokémon are Tailwind, Taunt, Light Screen, Reflect, Safeguard, Fake Tears, Charm, Taunt, and Thunder Wave… just to name a few. As a side note, it’s important to know that Reflect and Light Screen (as well as Aurora Veil) only reduces damage by ⅓ in Double Battles as opposed to ½ in Single Battles.
Dynamax and how to use it effectively
Unlike Smogon formats, Dynamaxing is legal and it defines the current metagame. When Dynamaxed, Pokémon can only use attacks or Max Guard and their current HP and maximum HP are doubled (when their Dynamax Level is 10). Additionally, all Max Moves have secondary effects that make some better than others; some max moves boost stats on the user’s side of the field, others drop stats on the target’s side of the field, and some create field effects like weather or terrain. On top of that, Gigantamax Pokémon can use their own unique G-Max Moves that have different effects from their normal Max Move counterparts. Something to keep in mind with Dynamax is that the Fighting-Type Max Knuckle and the Poison-Type Max Ooze boost Attack and Special Attack respectively, but with the caveat that their base power caps at 100 instead of 150. One quirk to Dynamax that should be mentioned is that any item or move that would heal it does so relative to their pre-Dynamax HP stat. This means, for example, that a Sitrus Berry will restore ⅛ of a Dynamax Pokémon’s HP and Heal Pulse will heal ¼ of its HP.
So how do you set a Pokémon up for success to Dynamax? Something like the popular Dusclops with its massive, Eviolite boosted defenses is forced to either protect itself or use its most used attack Night Shade using its pitiful special attack stat; this makes it very ill-suited for Dynamax. Offensive Pokémon, like Excadrill and Tyranitar are terrific Dynamax candidates due to their raw power. Excadrill is fast and hits hard while its max moves, Max Steelspike and Max Quake, allow it to boost its survivability by boosting its defensive stats. Tyranitar, on the other hand, is slower and bulkier which allows it to run a Weakness Policy with its common weaknesses to spread even more damage by retaliating against a super-effective attack. Other Pokémon are able to be used in a different way from their often supportive counterparts by running an offensive moveset with Dynamax in mind. In Togekiss’ case, for example, Dynamax-oriented sets make it an offensive monster instead of a supporter by boosting its normally decent speed to extreme levels with Max Airstream. So what makes a great Dynamax Pokémon? A good offensive presence with moves that compliment its strengths and/or make up for its weaknesses.
With that said, Dynamaxing is a helpful defensive tool that can be utilized to stall out your opponent’s Dynamax turns with Max Guard or combat their onslaught of attacks by giving your own Pokémon the HP boost they need to survive an attack or two and fire back to even the playing field.
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Advanced Tips
Team Preview
Also known to many as “Turn 0” of the game, analyzing Team Preview to prepare for a match is a valuable skill that many high level players take advantage of to develop a game winning strategy before the game even begins. So what do these players do when posed with their 90 seconds of team preview and the time between games in their set? First and foremost, a great player will identify the Pokémon they need to utilize and preserve in order to shut down their opponent’s team. How that’s done comes next with what support is necessary in order to reach that point or what other Pokémon need to be eliminated to make way for that trump card. Ensuring you bring the right lead two Pokémon and the right back two Pokémon is critical to winning. The next thing that players should look for is what their opponent needs to do to beat their team and bring out countermeasures to prevent that from happening. Another part of that is identifying what the opponent may lead off with and bringing a good opposition to that (without losing to other leads) Of course, this is much easier said than done, so it needs to be practiced in order to come to fruition at a high level. Don’t be discouraged if you don’t get it right away, this is one of the hardest things to do in Pokémon and the random factors and unpredictability of Pokémon make it that much harder to execute the strategies you conjure once the game starts. Be sure to use as much of the time you can in Team Preview to maximize your time to strategize, but be careful not to run out of time!
EV Spreads
When looking at popular teams, you may find yourself wondering what on Earth the distribution of their stats does. Why does it have all of those specific EVs across near every stat!? A lot of high level players calculate their Pokémon’s stats to survive popular attacks from other Pokémon or get the knock outs they need against Pokémon in a vacuum and to outspeed or underspeed opposing Pokémon both with and without speed control/boosts. While these can be influential, it’s important not to be bogged down with these numbers when putting your team together. A simple placement of 252, 252, and the extra 4 into another stat is just fine to hop into the game and start playing. If you really want to refine your stats, the biggest thing to focus on is your speed stat very often, but practice means so much more than some stat numbers.
Teambuilding Tips
When taking teambuilding into consideration for VGC, a lot differs from Single Battles you may be used to. Singles teams tend to focus on two primary roles: sweepers and walls. In VGC, those terms - more times than not - fall to the wayside. Your standard sweeper has to be ready to take on two Pokémon at once and be able to survive through any Protect predictions their opponent makes. On the other end of the spectrum, you have passive walls which can either be ignored by the opponent’s offensive onslaught until their three partners are knocked out or they can be handled quickly by double targeting into them. The most prevalent Pokémon in VGC are able to find a middle ground of offensive pressure and defensive staying power. The roles of Pokémon in VGC boil down to support and damage. Supporters range from redirection users like Amoonguss and Togekiss to speed control users such as Whimsicott and Dusclops. Next to those you’ll have your damage dealers like Dragapult and Rhyperior. These Pokémon are all incredible at what they do as they don’t simply just support or do damage. Good supportive Pokémon can still encourage some offensive pressure, Togekiss with Dazzling Gleam or Dusclops with Night Shade, and the damaging Pokémon are able to do damage and stay on the field, Dragapult by taking out threats before they can move and Rhyperior with its humongous physical bulk and its ability Solid Rock.
So that’s what makes certain Pokémon great for VGC, but how do you build a team with them? Every great team starts around the idea of a Pokémon or a concept and how it can carve out a strong role for itself among the popular Pokémon being used, whether it’s one of those popular Pokémon or strategies or not. After that’s identified, a good teambuilder will begin covering the weaknesses of the Pokémon, what it/they need for support in terms of redirection, speed control, or anything else. The things to ask oneself when teambuilding are the following:

• Are there any glaring weaknesses I have to certain types or specific Pokémon?
• Am I over preparing for one specific type of team or Pokémon?
• Do I have Pokémon that are fast enough to to outspeed others and, if not, do I have the durability to withstand them?
• Do I have a form of speed control on my team and, if not, could my team be improved by it?
• Do each of my Pokémon fill a crucial role on the team and could that role be improved through the use of a different Pokémon?
• Am I asking too much of my Pokémon? In other words: are any of my Pokémon built to have too many roles?
• Do any Pokémon or move choices of mine conflict with each other, such as using a Pokémon with the ability Psychic Surge on a team with a lot of priority moves or an Earthquake user with no Pokémon immune to ground nor Protect?

A few other things I want to address are “stealing” teams, using your favorites, and asking for help with your team. On the concept of “stealing” teams: nobody owns a team; there is nothing wrong or immoral about taking a team you see and like and using it for yourself. Some people may want to build their own team and have success with it without any help, but - if you really want to win - you have to cast aside that pride. As for using your favorites - especially when reaching out to others for help, again, if you really want to win - that’s fine if you truly think it can serve a function that no other popular, proven Pokémon can. If you solely want to use it because it’s your favorite, others may struggle to help you build a team around it as it may be overshadowed by other Pokémon in the metagame. To speak on asking for help, if you’re newer to the game and need help with what moves or items are good, that’s separate from what I’m about to discuss. When asking for help solely concerning team composition, the most important thing to do beforehand with a team is simple: try the team first. It’s important for both you and the person/people to understand where the team is weak in terms of match ups or Pokémon on your team not doing their jobs. Without that, it will simply be a matter of theory rather than observed examples that can assist in the improvement of your team’s structure.
Note taking
Some players like taking notes during their matches to help them remember useful information and sometimes new players are curious what types of important information they’re writing down. Here’s a list of popular things that those seasoned players like to take notes on:

• All six opposing Pokémon at team preview to save time from in-game menus
• What Pokémon are switched out from the opponent to recall what they brought
• If a Pokémon outspeeds/speed ties their own Pokémon
• How much damage an attack did if it was an unexpectedly high or low amount
• The items Pokémon may be or are confirmed to be or not be holding
• Moves that are seen from opposing Pokémon that may not be expected

Keep in mind, not every player at the top is big on note taking so it’s nothing that separates the elite players from the average player.
How to improve
A lot of times players ask themselves what they can do to improve how they play VGC. Is it their team that needs to be improved? Sometimes, maybe, but if they’re handed the World Championships winning team, what can they do to get better? The first answer is obvious: keep practicing. The more you play, the more you’re going to learn through sheer experience alone and nothing can substitute for good practice. To practice to the full effect, many top players quote the mantra “work smarter, not harder,” meaning that you shouldn’t always play so much you get exhausted, but rather play a handful of games and analyze them in depth to determine how you could have won lost games or secured victories more safely. That’s not always easy to do yourself, so asking in the Pokémon Showdown chat room may find you success while it may be helpful to post on the VGC subreddit. There’s no great centralized place for VGC help, but reaching out is the best thing you can do. Another way to improve is to try out different types of teams. While you may feel really comfortable with a team already, going outside of your comfort zone is a fantastic way to push your mind into understanding how different Pokémon function on different teams giving you an all around knowledge of teams you may face. Who knows, you may just find your new favorite team in the process, too!
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In Person VGC Events
Due to COVID-19, VGC events that take place in person are not taking place. We currently don’t know the structure of how official tournaments will be implemented during this trying time; whether they’ll be postponed or an online circuit will come about is unknown. With that said, here’s how official, in person events operate.
Do you need to qualify for tournaments?
Other than the World Championships which are held once per year, you do not need to qualify for any VGC Tournaments. All you have to do is simply sign up and (sometimes) pay an entry fee to attend them!
So how do I qualify for the World Championships?
Currently, you must play in officially sanctioned Play! Pokémon tournaments and earn enough Championship Points (CP) by placing well enough at them. The amount of CP you get from an event based on your placement depends on the level of the event and the amount of players. This information can be found here: https://www.pokemon.com/us/play-pokemon/pokemon-events/pokemon-tournaments/earn-championship-points-vg/
What kinds of tournaments are there?
There are five levels of live VGC tournaments other than the World Championships. From lowest to highest CP payout: Premier Challenges (PC), Midseason Showdowns (MSS), Regional Championships (Regionals) and Special Events (SPE), and International Championships (Internationals, Internats, or Nats). In addition to these, there are also online International Challenges which are done all online via Battle Stadium using a ranking ladder to determine standings. Premier Challenges and Midseason Showdowns are held at a local level and are not directly run by TPCi while Regionals, Special Events, and Internationals are larger tournaments with a much higher payout that are run by TPCi.
How do I know when and where tournaments are?
On https://www.pokemon.com you can select the Play! Pokémon Events tab at the top of your screen for more information on Regionals, SPEs, and International level Play! Pokémon tournaments. For information on local events, you can search your area using this link: https://www.pokemon.com/us/play-pokemon/pokemon-events/find-an-event/
Tournament Structure
Official Pokémon tournaments, as well as most community-run events, use a Swiss structure followed by a top cut bracket. Swiss is a format in which there is no elimination, but instead you play one opponent every round - the amount of rounds varies depending on the amount of entrants - and try to have the best win/loss ratio you can get. You may hear people say they want to “go X-2” because a record with only two losses usually has a good chance at top cut in large tournaments, may automatically qualify you for said top cut or the next day of larger tournaments, or will guarantee you an amount of CP. Top cut is a single elimination bracket that pits players against each other based on where they stand in seeding and is often played on a separate day at events above the MSS level. Official events are almost always played as Best of 3 sets meaning that you need to beat your opponent twice in order to win that round. With that said, the four Pokémon you choose in your first game do not need to be used in games two or three, so trying different strategies is encouraged.
Timers
There are a few timers in VGC: team preview time, move selection time, your time and match time. Team preview lasts 90 seconds which you are allotted to select what four Pokémon you will bring to each game and does not impact any other timer. When selecting your moves, you have 45 seconds to confirm your selections. During this time Your Time runs and is a 7 minute timer. If your time runs out, you lose the battle. The match time varies based on each tournament (usually 15 minutes), but at official tournaments is 20 minutes; it runs once the first move selections of the game are available and does not stop throughout the match. If the match timer expires, the match is determined through a hierarchy of checks made by the game itself. In the case of the match timer expiring, whoever has more Pokémon at the end of time wins. If that number is equal, then whoever has the highest percentage of total team HP remaining wins.
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Other Helpful Resources

• https://www.pikalytics.com/ - The best multi-tool for competitive Pokémon in general
• https://www.reddit.com/VGC/ - the VGC subreddit run by successful players and judges, you're already here!
• https://www.babiri.net/ - List of top teams used from top Showdown ladder players
• https://victoryroadvgc.com/ - a dedicated VGC resource with articles and teams
• https://www.trainertower.com/ - another dedicated VGC resource with articles and teams
• https://vgcstats.com/ - Live rankings of Pokémon based on official tournament results

EDITS (MM/DD/YYYY):
08/06/2020 - Added a section discussing the Sleep status and touched on Safety Goggles