DraftKings has secured its position as a major player in the developing online sports betting and gambling market in the US through a multi-year deal reached with Caesars Entertainment yesterday that will grant DraftKings access to states where Caesars operates and sports betting is legal.
According to a press release issued yesterday, Caesars will be taking an undisclosed equity stake in DraftKings and getting a piece of the fantasy and sports betting giant’s revenue moving forward.
DraftKings in return will gain access to markets in which Caesars operates, subject to local law. This is the crucial part of the deal for DraftKings because, generally, states have tended toward a sports betting licensing model that is exclusive to local land-based operators. With this deal in play, DraftKings will be able to enter additional states in partnership with Caesars.
DraftKings’ market access will be “exclusive to Caesars across certain states in which Caesars operates casino properties.” The deal will also see DraftKings promote Caesars Entertainment as its official casino resort partner in states where the two collaborate.
DraftKings’ First Multi-State Partnership
Caesars Entertainment President and CEO Mark noted in the press release that this is DraftKings’ first multi-state partnership. He also described the deal as bringing together “the established leaders in gaming, daily fantasy sports and sports betting” to give locals even more gaming 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,” he said.
Pennsylvania Not Included in New Deal
There was some speculation on Monday that since DraftKings stands to gain market access to states in which Caesars already operates, whether Harrah’s Philadelphia would be the one to welcome DraftKings to the PA sports betting market.
Gambling Compliance shut down that possibility shortly afterwards when it noted Harrah’s Philadelphia will not be teaming with DraftKings and the casino will instead be adopting its current sports betting plan under the Caesars brand.
That plan involves a roll out of an online betting app powered by Scientific Games later this year, and the reason DraftKings won’t be part of that plan is that sportsbook operators in PA are limited to running one website at a time.
This is in contrast to the rules of New Jersey, for example, where multiple websites (a.k.a. “skins”) are allowed. Caesars launched its Sportsbook NJ brand in September last year. With Caesars opting to use its own brand name via the online betting license it obtained for its Harrah’s PA resort, that leaves no room for a DraftKings/Caesars partnership in Pennsylvania.
PlayPennsylvania.com, however, leaves some hope for DraftKings in Pennsylvania through a partnership that it has with Penn National. At the end of last year, the two signed a deal that applies to West Virginia but that could, theoretically, expand to Pennsylvania.
One of Penn National’s properties in Pennsylvania, The Meadows, has not yet applied for online gambling or sports betting licenses. Although The Meadows will miss out on the online casino market due to the deadline for online casino applications already passing, it can still apply for a sports betting license. This could be a good fit for DraftKings, if and when the two decide to expand their deal into other states.
DraftKings Leads New Jersey Sports Betting Numbers
Founded in 2012, the Boston-based DraftKings has been at the forefront of the US sports betting market since the beginning. At present, the group offers DFS contests across 11 professional sports in eight different countries and boasts a customer database of 10 million.
DraftKings was the first to offer its products in New Jersey’s sportsbook market in August 2018. This was just as the Garden State opened its legal and regulated sports betting industry following the landmark Supreme Court ruling that overturned the near-nationwide ban on sports betting.
Since then, DraftKings has led New Jersey in mobile sports betting revenue consistently every month. According to the press release, last month saw mobile sports betting account for almost 80% of New Jersey’s total sports betting revenue.
Speaking on the new deal with Caesars Entertainment, DraftKings CEO and co-founder Jason Robins said partnering with such a world-class gaming organization will expedite DraftKings’ national roll-out process. He said the deal will also give DraftKings the opportunity to work side-by-side with one of the largest, most-established industry leaders.
“We look forward to collaborating with Caesars Entertainment on creating the most innovative and engaging sports and entertainment products and events for our customers,” he said on Monday.
DraftkIngs currently operates sportsbooks in Mississippi and New Jersey in addition to securing its place in New York and West Virginia via deals reached with local operators. The new deal should help DraftKings Sportsbook obtain online and mobile gambling rights across the United States a whole lot quicker. Caesars’ VP for gaming and interactive entertainment, Christian Stuart, reports DraftKings will hold at least five events per year at Caesars properties in states where they plan to collaborate.
DraftKings does not own physical properties; as such, it makes a good fit for Caesars Entertainment, which operates 42 properties in 13 different states, including Nevada. It should be noted that DraftKings recently opened an office near Las Vegas, although it has not yet applied for a gaming license there.
Grabbing a Piece of the $6.5 Billion Pie
The US Supreme Court ruling in May last year opened up a floodgate of states seeking to benefit from the revenues in their own legal sports betting markets.
Currently, sports betting is taking place in eight states:
New York, Washington DC and Arkansas recently saw sports betting bills pass and many other states, including Connecticut, Illinois, Kentucky, Michigan, Indiana, Massachusetts, Maryland, Kansas and Minnesota are moving towards legalization.
Eilers and Krejcik Research firm believes that the US sports betting market could be worth $6.5 billion in revenue in just four years’ time.
Eilers Managing Director Chris Grove told Las Vegas Review-Journal: “This is definitely a deal that DraftKings needed to do as there were serious questions about how they were going to gain access in states like Illinois and Indiana”.