DraftKings and Caesars Entertainment Corp. announced on Monday that the two have come to terms on a partnership. The two sides announced that Caesars would help DraftKings with regard to its burgeoning online gambling product, with Caesars taking an equity stake in return. Financial terms of the pact have not yet been disclosed publicly. Caesars will also get a stake in the gambling revenue generated by DraftKings in states in which the partnership is enacted.
Caesars currently operates land-based casinos in 14 states across the US, a number that is likely to grow in the coming years as more and more states begin to legalize and regulate sports and other forms of gambling. Having those casinos based in certain states will presumably give DraftKings the chance to capitalize on new opportunities in those regions.
Mark Frissora, the President and CEO of Caesars, said in a statement, “Caesars’ agreement with DraftKings, their first multi-state partnership, brings together the established leaders in gaming, daily fantasy sports, and sports betting to provide customers more options.”
“This alliance is the latest initiative by Caesars to capitalize on our database, generate a new revenue stream in a growth market and raise our profile in sports, in part by creating new sports-themed guest experiences at our resorts across the country,” Frissora continued.
DraftKings currently has no brick-and-mortar casino properties of its own, but this partnership will allow the company a path toward acquiring necessary licenses in a number of different states. Caesars, meanwhile, currently operates 37 casino properties across 14 different states.
Many states allow land-based casinos to license mobile and online gaming rights. DraftKings has previously partnered with the Resorts Casino Hotel in Atlantic City on a similar deal. DraftKings will be able to offer casino games like poker and slots in addition to sports bets at Caesars properties in states in which such activities are legal.
The agreement will officially put an end to the unofficial competition that had previously existed between the two gambling entities. Both Caesars and DraftKings currently operate in the state of New Jersey, which became the first state in the country outside of Nevada to legalize sports betting following the Supreme Court’s decision to strike down the Professional and Amateur Sports Protection Act (PASPA) last May.
DraftKings began offering casino games in New Jersey shortly after the state legalized such gambling endeavors. The company, which is based out of Boston, is known primarily for being a pioneer in the realm of daily fantasy sports.
With more than 20 states weighing the potential legalization of sports betting, DraftKings reportedly wanted to do a deal like this in order to move into the fledgling markets as soon as possible.
In a statement, DraftKings CEO Jason Robins said, “Partnering with such a world class gaming organization will expedite our national roll-out process and give us the opportunity to work alongside one of the largest and most established industry leaders in the world.”
Indiana and Illinois are a couple of states that are reportedly strongly considering the legalization of sports betting via mobile device. Both states have betting proposals set to be voted on this year, which essentially means both are currently untapped markets. Caesars has a total of six properties between Indiana and Illinois, so the new partnership should give DraftKings some solid footing in the area.
The deal dictates that DraftKings will promote Caesars as the company’s official casino partner in states in which the two have teamed up.
However, the agreement between the companies does not mean that Caesars is closing up shop on its own online betting offerings. Caesars plans to continue offering mobile betting in states in which it’s legal in addition to DraftKings’ separate but similar endeavor.
Eilers and Krejcik, a gambling research firm, recently estimated that as much as $6.5 billion in revenue could be generated by the sports betting industry by the year 2023 as more and more states continue to legalize sports gambling. DraftKings was one of the first companies to take advantage of the Supreme Court’s aforementioned decision when the company launched its online sportsbook this past August in New Jersey. FanDuel, DraftKings’ most direct rival, did the same shortly thereafter.
Caesars recently became the first gambling entity to align itself with the NFL when the two came to an agreement several months ago for about $30 million per year. Caesars also has a branded space inside the Prudential Center, which is the home arena of the NHL’s New Jersey Devils.
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