Alliances between traditional gambling companies and ambitious online gambling outfits continue to materialize amid the surge in state-regulated sports betting.
On Monday, Caesars Entertainment announced a long-term, multi-state partnership with DraftKings. The deal facilitates broadened market access for DraftKings, covering both its online sports betting and online casino products as applicable.
Until this week, the two parties were among the elite free agents available at their respective positions.
Caesars is one of the largest casino companies in the world, boasting the sort of expansive US footprint that makes it a desirable partner. It operates nearly 40 properties in more than a dozen states, including a few with existing online gambling industries.
Aside from its daily fantasy sports business, DraftKings has emerged as a legitimate contender to “win” the US online sports betting market. It has worn the crown in New Jersey since launch, responsible for about a third of the industry’s total revenue in a given month.
Caesars is now a partial owner of DraftKings. The alliance includes an undisclosed equity stake, as well as an undisclosed share of DraftKings’ revenue in partnered markets.
Here’s CEO Mark Frissora on the tie-up:
“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.”
According to Bloomberg, that customer database contains about 55 million names.
Caesars does plan to operate a suite of online gambling products alongside DraftKings in markets that permit multiple points of entry. In states that allow only a single brand, however (and, of course), Caesars will prioritize its own.
This is a similarly impactful deal for DraftKings, a relative newcomer to the gambling space — and a disruptive one. Its DraftKings Sportsbook has been the NJ online sports betting leader since it went live last year, and the launch of DraftKings Casino propelled the state’s online casinos to a record-setting report in January.
The current DraftKings assets are enviable, including a world-class sports betting platform and a database of millions of customers interested in sports and gaming. The company reportedly sought to raise funding at a $1.5 billion valuation last year.
What DraftKings had been lacking was access to live and nearly-live US online gambling and sports betting markets. So far, its online presence is restricted to New Jersey, with land-based sports betting operations extending to Mississippi.
From a market-access perspective, the partnership is worth its weight in gold for DraftKings.
Here’s CEO Jason Robins on that aspect:
“Partnering with such a world class gaming organization will expedite our national roll-out process and give us the opportunity to work alongside one the largest and most established industry leaders in the world. We look forward to collaborating with Caesars Entertainment on creating the most innovative and engaging sports and entertainment products and events for our customers.”
DraftKings also has a pending deal with Penn National Gaming to access the West Virginia sports betting market.
If DraftKings Sportsbook does end up finding a foothold in Pennsylvania, it likely won’t be under the Harrah’s license. According to Gambling Compliance (GC), the partnership does not extend into the Keystone State.
“We will operate in Pennsylvania alone,” Caesars spokeswoman Jennifer Forkish told GC.
That leaves DraftKings without a clear path into the current most-populous US sports betting market. Its primary competitor, FanDuel Sportsbook, will use the Valley Forge license for PA sports betting under its partnership with Boyd Gaming.
Theoretically, DraftKings Casino could make an appearance in the PA online gambling market. Regulations permit multiple online casino brands, but it’s not clear if DraftKings would deploy a standalone platform at this point.
Time will tell, of course, as the implications of this partnership continue to come into focus.
Pennsylvania could become the leading US market for sports betting revenue in time, but Nevada still holds the top spot for now. And it looks like it may welcome Caesars’ new partner into the market. DraftKings could operate online sports betting within the state, presuming it seeks licensure from the NV Gaming Control Board.
Even the threat of a new competitor in Nevada should be a wake-up call for existing sports betting operators, which have rested on their laurels from a development standpoint. DraftKings will bring to market one of the most user-friendly, feature-rich platforms in existence and an aggressive blueprint for customer acquisition.
Any expectations for DraftKings Sportsbook in Nevada should be tempered, though. While the Silver State does allow mobile betting, it requires in-person registration for new account holders. DraftKings exists as an online-only entity, without a land-based casino license in any jurisdiction.
It’s not yet clear if DraftKings Sportsbook customers will be able to create accounts at Caesars’ properties in Nevada.