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Betting legalisation creates new opportunity for DraftKings

Read this alongside our in-depth review of the potential US sports-betting industry.

In July 2015, DraftKings was valued at over $1bn (€810m). The daily fantasy sports site had attracted $160m of investment from media giant 21st Century Fox and you couldn’t turn on a TV in the US without seeing an ad promoting one of DraftKings’ big money prize games.

Since then, the company has been dogged by a series of setbacks. Prolonged legal wrangling based on whether playing fantasy sports for money constituted gambling, and was therefore illegal, resulted in DFS operators being banned in several US states. Last year, a proposed merger with DFS rivals FanDuel collapsed.

But an impending Supreme Court decision could revitalise the firm with the chance to enter the sportsbook market. 

Twenty-six years after a ban was imposed in response to a series of match-fixing scandals, the state of New Jersey is attempting to overturn the law. Should the Supreme Court rule in New Jersey’s favour, it could kick-start an industry that is said to be worth around $150bn. 

Jeffrey Haas is the Chief International Officer for DraftKings. Speaking to SportBusiness International at the recent Betting on Football Conference, he said, “We thought it was more likely than not that the Supreme Court would rule in favour of New Jersey. I put the possibility at 51 per cent. So, with a 51 per cent chance that a tremendous market opportunity might open up we’ve taken some decisions to prepare for that.”

Indeed, DraftKings has opened an office in Hoboken, New Jersey that will become the home of its sportsbook operations.

Haas believes DraftKings’ huge customer base of nearly 10m people, will give it a big advantage over its new rivals.

He added, “Even if you have William Hill or Bet365 coming into the marketplace they come in with a sports betting offer but they won’t have a DFS offer. If we find a way to create a compelling user experience that maximises the reward a player has for playing in all the different products I think that will translate into phenomenal retention rates.

“Our biggest competitor on launch day will be the offshore sportsbooks who don’t have to pay any taxes or abide by these regulations. But right now, there is no good in-play betting product in America. You have the Nevada books who don’t all have modern products yet and you have the offshore operators who have not invested in creating the type of competitive product that’s available in Europe today.

“As a result, American consumers, for the most part, have never seen in-play betting before. We believe that will be phenomenally successful based on learnings from other parts of the world. Our intention is to go into the market with the best possible product in the marketplace.

Haas added: “In an ideal situation we would be able to launch before the start of the NFL season in September 2018.”

It’s not just DraftKings that could be staking its future on US betting. FanDuel is also preparing to enter the sportsbook arena, while established operators have, to varying degrees, been taking an interest in the US.

Similarly, casinos across the country are ready and waiting to accept wagers on sporting events. DraftKings is actively seeking a casino partner in New Jersey.
 

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