It is very clear that daily fantasy sports juggernaut DraftKings has shifted quite a bit of focus to prepare for the possibility of sports betting expanding beyond the borders of Nevada in the near future. DraftKings has hired a "Head of Sportsbook" and is looking at expansion to a sportsbook as a tremendous source of new revenue for a company struggling to turn a profit.
"We're pretty excited about it," DraftKings CEO Jason Robins said recently to CNNMoney. "It's a huge market that has the opportunity to create lots of new players, lots of new revenue and really open up things in a way that they never have been before in the United States."
Robins was referring to the case currently pending before the U.S. Supreme Court concerning the constitutionality of a 1992 federal law called the Professional and Amateur Sports Protection Act that prohibits many sports wagers outside of Nevada and which has surveyors of the sports betting landscape constantly checking for when the highest court will be releasing new decisions, hoping that it will be sooner rather than later. Many are quite excited by the potential of a decision being released on April 2, which happens to be the same day that the NCAA Men's Basketball championship game will occur.
A new report written by Chris Grove and published by research firm Eilers & Krejcik Gaming indicates that DraftKings seems to be doing more than simply building out a "Sportsbook" division with key hires internally. In fact, DraftKings appears to be taking very proactive measures to put itself in a strong position to leverage its user base and technology should the aforesaid federal law be changed or removed altogether.
"Rumor has it that the daily fantasy sports leader is aggressively shopping for sports betting partnerships in the New Jersey market, positioning itself as a one-stop solution for land-based operators looking for a way to offer sports betting in the casino and online," states the report. "Of course, the question of what technology DraftKings would bring to the table is an open one – it has no sports betting tech that we’re aware of – and leads to another rumor that’s been floating around as of late: that the company is close to a deal with a major B2B provider to provide DraftKings with an in-house sports betting platform (whether that’s indefinitely or until DraftKings develops something of its own is another unknown)."
Such a strategy makes perfect sense. Many jurisdictions currently discussing legislation to legalize sports betting should the federal law change are considering only allowing current in-state operators to provide sports wagering options. Further, some states do not yet feel comfortable with allowing online wagering, requiring bettors to travel to land-based casinos to make bets. By setting up partnerships now, DraftKings may be in a position to make money even in those states that would otherwise make it difficult for the online operator to directly participate in the action.
A request for comment was sent to DraftKings, but no response has been offered by the time of first publication.
Update: DraftKings has since provided the following statement: "DraftKings, with the world’s most popular daily fantasy sports platform and nearly 10 million sports-mad customers, is perfectly positioned to succeed in a legal sports betting market. In preparation for the possibility of sports wagering in New Jersey, DraftKings has naturally had discussions with potential land-based casino partners, as required under the state’s online gaming regulations. We do not have any announcements at this time, and our focus continues to be on creating great sports entertainment experiences for the millions of customers who currently use DraftKings."
Darren Heitner is the Founder of South Florida-based HEITNER LEGAL, P.L.L.C. and is the author of How to Play the Game: What Every Sports Attorney Needs to Know (Second Edition).
