MLB Signs DraftKings as Official League Partner for Gaming

Major League Baseball has signed DraftKings Sportsbook as an Authorized Gaming Operator (AGO) after the two reached a multi-year agreement announced on Thursday.

The AGO title means DraftKings will now have permission to use MLB logos on its betting products and have access to official league data in order to offer advanced in-play betting markets to DraftKings customers.

In a statement, DraftKings Chief Business Officer Ezra Kucharz said this on the DraftKings MLB partnership:

“DraftKings is proud to be designated as a Major League Baseball Authorized Gaming Operator. This deal speaks to the commitment we have to our customers and sports leagues alike while providing the safest and most entertaining American-made sportsbook. As a result of this agreement, our customers will experience enhanced live wagering offerings for all MLB games.”

DraftKings MLB Partnership Drawing Closer Ties

This deal is not the first time DraftKings and the MLB have reached a partnership agreement. In fact, this is the second time the two have come closer. DraftKings Daily Fantasy Sports and the MLB first reached a cross-promotional agreement back in 2013 that included the MLB taking an equity stake in the fantasy provider.

The two further deepened their relationship in 2015 with an expansion of the existing daily fantasy agreement. Under the 2015 expansion, DraftKings gained access to MLB trademarks, integration of DraftKings content on MLB broadcasts and digital products, and the ability to award prizes to contest winners that involve in-person MLB experiences.

Now, DraftKings and the MLB have taken the relationship one significant step further by expanding it to cover actual MLB betting. As additional states pass legalization measures, DraftKings will be well-positioned to cater to baseball fans across the country.

Over the years, most MLB teams have reached deals with DraftKings. In 2015 alone, DraftKings announced sponsorship deals with 27 MLB teams. In return, DraftKings gained in-stadium signage, as well as promotion on media platforms run by the teams.

DraftKings CEO Jason Robins also noted that year that baseball was one of the fastest-growing categories in DFS. He explained that MLB/DraftKings partnerships ensure the continued dominance of DraftKings in offering engaging fantasy games and experiences for customers.

Sports Leagues Searching for Partners with Mixed Results

The MLB and other sports leagues have been in the market to woo sports betting providers to become AGOs of late. The crusade has not been particularly successful as of yet with sportsbook managers having a hard time justifying the price of what leagues are offering in terms of data and branding.

The leagues would obviously like to get a cut of what will shortly become multi-billion-dollar sports betting market, but their attempts to do that have been marginal at best. First, it was the MLB and NBA lobbying lawmakers to include “integrity fees” into sports betting legislation.

These fees, the leagues insisted, are necessary to offset the additional costs of protecting their respective sports from corruption now that sports betting is legal. The fees asked for a “mere” 1% of betting handle to offset the cost, which sportsbook operators noted was actually an enormous burden equivalent to taxing net revenue upwards of 20%.

Not even lawmakers, who generally have little experience with sports betting, were swayed by the leagues’ arguments – especially in light of easily articulated arguments that bringing sports betting out of the black market and into the light of regulation should actually make it easier to protect integrity. To date, no state has enacted legislation with the desired integrity fee.

The NBA’s Adam Silver later attempted to change tack by comparing integrity fees to “royalty fees” that should be paid to the leagues for hosting the games upon which sports betting operators take wagers. This argument too has mostly fallen on deaf ears, partially because numerous studies have shown sports wagering benefits leagues by generating increased fan engagement and viewership.

The leagues seem to have given up on integrity fees for the most part in favor of pushing instead for legislation forcing sportsbook operators to purchase official data from the leagues for the purposes of settling in-play wagers. The leagues have had some success in convincing lawmakers to introduce legislation requiring the purchase of official data, but have also moved on to seeking private, voluntary agreements with betting operators involving data.

This latest partnership between the MLB and DraftKings is one such example of a league successfully courting an operator on a voluntary basis to purchase official data. Moreover, this deal gives DraftKings additional benefits beyond pure MLB betting data. DraftKings will also gain the benefit of using MLB logos on its own betting operations to further enhance legitimacy.

However, the MLB and NBA are still willing to play hardball in securing agreements of this type. According to an Associated Press report from last month, the leagues have warned operators that refusing to sign such agreements may result in losing access to data feeds – including feeds provided by third-party services contracted with the leagues.

Despite this, not all sportsbook managers are convinced. Jimmy Vaccaro, Director of Sports Relations for Rivers Casino Pittsburgh, put it this way when speaking with the Associated Press:

“My database in my brain is just as much or more than the database that they can send out. People like me have been doing it for their entire life and it always comes out about the same, we hold about the same percentage wise… We don’t need help. What are they going to offer me that I can’t already see? We don’t need their database that bad.”

There is obviously some room for improvement in these negotiations, but the leagues have managed to secure a number of deals with sports betting and fantasy providers over the years. This latest partnership between the MLB and DraftKings, for example, shows agreements can be made.

Kenny Gersh, MLB Executive Vice President of Gaming & New Business Ventures said this in a statement on the latest deal with DraftKings:

“Given DraftKings’ successes in driving fan engagement and immersive experiences, we’re looking forward to an expanded partnership and further collaboration on engaging products. Buoyed by our collective commitments to drive innovation in the U.S. sports betting marketplace, the tools provided to DraftKings – including fast, rich and reliable data feeds and MLB brand marks – will be central to creating these powerful new ways to consume and connect with our sport.”

MGM Resorts Also an Official MLB Betting Partner

Despite some obvious difficulties the MLB has had convincing certain sportsbook operators to get on board, it hasn’t been all strikeouts, all the time for the league.

Back in November, the MLB and MGM Resorts International announced a multi-year partnership naming MGM the “Official Gaming Partner of MLB” and “Official Entertainment Partner of MLB.”

Most notably, that deal includes MGM Resorts having access to official league data. The MLB and other leagues may have had little success convincing state legislatures to mandate the use of official data, but these deals go to show there are indeed free-market solutions to be found if the leagues are willing to engage with operators.