Not to be outdone by their mortal enemy FanDuel, DraftKings has also made a successful foray into the legalized sports betting industry. Like FanDuel, DraftKings started out as a fantasy sports company, but has now expanded into the gaming and sports betting niches. If it’s any indication, the recent New Jersey gambling numbers for the month of August show that DraftKings (DK) is well on its way to another highly profitable venture.
Not only has DK positioned themselves in the Garden State, but they have also expanded into other states that either have legalized sports betting already or are about to in the near future.
New Jersey’s Resorts Casino Hotel in Atlantic City was the first casino to make a deal with DraftKings on June 1st. Two weeks after the Supreme Court overturned PASPA, Resorts and DraftKings were already working out a deal. For the casino, DraftKings offers a variety of in-game betting opportunities via web-based and mobile operations.
August’s revenue numbers for New Jersey’s sports betting market shows that online betting will have a similarly dominant role in the United States market as it does internationally. Online sports bets made up just over one-third of NJ’s total sports betting revenue in August. Those numbers come from only three brands in the online market for only a portion of the month, with limited deposit options and products. One can only guess at what September’s revenue will look like. According to gambling technology provider GAN plc’s CEO Dermot Smurfit,
“Online sports betting appears to be as substantial an opportunity as forecasts suggested. Unlike Internet gaming forecasts back in 2013, this time the forecasters look to have got things right. Online sports betting revenue will likely equal or eclipse retail sports betting revenue in September.”
In August, DraftKings led all of New Jersey’s online sportsbooks with $2.9 million total revenue. For about three weeks the company had the NJ market to itself before being joined by SugarHouse and playMGM in the final week of August.
Forbes says that New Jersey sportsbooks will likely book more than one-quarter of a billion dollars in bets for the month of September due to increased marketing, improved products, and new brands.
New Jersey’s sports betting market allows for a variety of brands to compete. Right now, licenses to operate online sports betting are restricted to NY’s land-based casinos and racetracks, but each key license holder is allowed to have up to three unique sports betting brands online, and can also make deals with external brands. This is how DraftKings can get in on sports betting in the state since it doesn’t operate a racetrack or casino.
On July 16th, DraftKings announced a partnership with del Lago Casino & Resort in Waterloo, New York, that will give DraftKings a physical Vegas-style sportsbook and the opportunity to create an online and mobile wagering option in the event that New York allows this kind of betting with its regulations.
del Lago is the second upstate New York casino to make a deal with a DFS league to run sports betting.
In New York state, DraftKings will compete against FanDuel, which has a similar partnership with Tioga Downs in Nichols, New York. Outside of California, New York is the second-largest potential sports betting market in the country.
In 2013, New York passed a law that would allow the four new non-Indian casinos to operate sportsbooks assuming the federal ban would be lifted. Those four casinos are Resorts World Catskills near Monticello, Tiogo Downs, del Lago, and Rivers Casino & Resort in Schenectady. This law only allows for brick-and-mortar sportsbooks; it also prohibited betting on New York college teams and on any sporting events taking place within New York. State lawmakers tried to update the 2013 law before this year’s legislative session ended in June but were unsuccessful, leaving the terms of the 2013 law still in effect.
New York’s Gaming Commission is currently drafting rules and licensing procedures that will be based loosely on the 2013 law. Until the Gaming Commission finished this process, which has no set timetable, casinos cannot operate sportsbooks in any fashion.
Already allowing sports betting, Pennsylvania is another option for DraftKings to spread into the U.S. sports betting market. However, regulations within Pennsylvania restrict each casino to only one mobile/online platform displaying its own logo, and the casinos may only use one sports betting partner.
Of half of the 13 prospective licensees in Pennsylvania, four casinos already have deals made with sports betting partners, and so far DraftKings isn’t one of them. Time will tell.
Sports betting in West Virginia has been underway since the beginning of the month, and only one casino has made a deal with a sports betting partner, and it isn’t DraftKings. FanDuel and The Greenbrier signed an agreement in late-June, and have just opened the FanDuel Sportsbook this week. Regulators and state officials hope to have sports betting at all five casinos and via mobile apps at some point in September, so it’s very possible that DraftKings will work out a deal with one of the other (potential) licensees.
Nevada up until now has been a no-go state for DraftKings because there, daily fantasy sports is prohibited as a skills game. But now that DraftKings is a sports betting company, it may very well spread its business into the Silver State. Legal Sports Report recently said that DraftKings actually plans on opening an office in Las Vegas, perhaps to take advantage of the void left by CG Technologies after the company was forced out of the Nevada market due to a string of gaming violations.
Any state that allows legal sports betting is a possible candidate for DraftKings Sportsbook, to one extent or another. Mississippi is one of those possible states, but as of right now, the state doesn’t allow mobile wagering off of casino grounds.
Delaware and Rhode Island have legalized sports betting as well, but neither allow mobile betting, and neither have any provisions for allowing partnerships. The lotteries in each state basically control which state-chosen suppliers are allowed to participate.
September 12, DraftKings CEO Jason Robbins said the operator will not enter the casino business. Amid speculation around the DFS and sportsbook firm’s partnership with Resorts Casino Hotel in New Jersey, the CEO said he doesn’t think they are well-positioned to enter the industry. Instead, Robbins wants DraftKings to focus on its tech-driven products like its DFS as well as sports betting. In an article on metro.us, he went on to say,
“I don’t think so [regarding a casino]. What we do is provide technology-driven products. I think it’s a different business. Casino is real estate, it’s the hospitality business. The knowledge of how to run casinos is so different. We’re not positioned too well to do well in casinos. We are positioned very well on the mobile end of the sports betting market though. The world is moving online and to mobile anyway. I think we’re in a good spot.”
As of September 11th, DraftKings has added PayPal to its list of payment options. Before now, the company offered withdrawal and deposit options only through bank transfer, MasterCard, and Visa. At first that wasn’t an issue, but as more companies came into the online sports betting market, and were offering PayPal as an option, DraftKings started to feel pressured.
In many cases, banks will decline any transactions dealing with online gambling, despite its legality, so this creates a lack of options for depositing. There were a lot of frustrated bettors who couldn’t get money online directly, and it was only a matter of time before those customers moved over to online betting sites that offered PayPal, like Caesars online casino, FanDuel, and SugarHouse Sportsbook.
With the new addition of PayPal as a payment option, DraftKings will level out the playing field a bit more and we’ll have to wait and see how that translates in revenue when the numbers are in for September.
DraftKings started out in 2012 as a daily fantasy sports contest provider based out of Boston, Massachusetts. With some outside funding and an influx of users, the company soon flourished into what it is today. The following is a list of some of the company’s highlights as they morphed into a major fantasy sports and sports betting player:
In 2014 the company signed a two-year deal to become the official daily fantasy sports (DFS) service for the NHL, and the next year, signed a similar deal with MLB. In July 2015, DraftKings signed a three-year advertising contract with ESPN, which included exclusive advertising on ESPN networks starting in January 2016.
In November 2016, plans for DrafKings to merge with FanDuel came out, but the Federal Trade Commission blocked the proposal due to the opinion it would create a monopoly position. Plans were aborted.
In November 2017, the company announced it had purchased digital rights to EuroLeague basketball games in the United States and Canada. Beginning in 2018, DraftKing streams games to people who participate in associated DFS contests with a minimum entry fee, and offers one free streaming game each week.
In February of 2018, the company appointed Sean Hurley to run its new sportsbook business, with plans to launch this new line of business in the event that the Supreme Court would decide to overturn PASPA, the federal ban on sports betting outside of Nevada. This ruling became reality in May 2018 and individual states started to legalize sports betting.
In Aug 2018, DraftKings launched its first legal online sportsbook in New Jersey and was the first online sportsbook in the U.S. outside of Nevada. By Sep 7, DraftKings had already accepted 1 million bets in New Jersey.
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