DFS giants invading US online casino industry

DraftKings, FanDuel Roll Out Standalone Online Casino Apps To Complement Sportsbooks

The expansion of the largest daily fantasy sports companies into other forms of gambling continued in earnest this week.

On Tuesday, DraftKings and FanDuel each announced the launch of their standalone online casino app. Both are beginning with a single state — New Jersey for DraftKings and Pennsylvania for FanDuel.

The two have poured nine figures into marketing over the recent years, and the resulting brand recognition is paying off in spades thanks to the spread of legal US online gambling. Sports betting was the most obvious avenue of expansion, but both have since branched out into casino games.

The impact of those new markets and products is unmistakable.

DraftKings went public earlier this year, and its stock price has nearly quadrupled in just two months. The company is now valued around $10 billion. For its part, FanDuel was acquired by Paddy Power Betfair in 2018 before the group changed its name to Flutter.

Cutting the cord with sportsbook apps

Neither of these markets is new for either company. New Jersey was the very first state in which DraftKings and FanDuel blossomed into full-scale online gambling, and both are operational in Pennsylvania too.

Their initial casino offerings were not standalone products, however. They were included as a tab in the companies’ sportsbook apps and marketed primarily to sports bettors. It wasn’t immediately clear how much interest DFS customers would have in non-sports products or how much value the brands themselves would have in the casino space.

Those questions have since been answered in dramatic fashion.

DraftKings Casino generated $3.7 million in gross gaming revenue during its first full month of PA online gambling operations. FanDuel Casino is doing even better, pulling in over $8 million in May.

As far as branding goes, a study conducted by DraftKings similarly settles that issue. It found that 70% of its new customers place their first bet on a game using DraftKings branding rather than a third-party, white-label product.

New casino products on the way

DraftKings is an innovative company; its youth and rapid pace of expansion seem to help in that regard. It even has its own startup accelerator, Drive, to foster innovation at the intersection of sports, gambling, and technology.

In announcing its new casino app, the company also revealed that it is working on new games. Some of these will be unique to DraftKings, while others will consist of riffs on standard table games like blackjack and roulette.

One interesting fact to come out of the PA launch is that the relative popularity of table games to slots is much higher among its users than most competitors’. The same trend can be seen with FanDuel and PokerStars/Fox Bet, while sites with casino-focused branding tend to see more slots play.

This dynamic may reverse itself, however, if the companies succeed in courting more casino-focused customers. In its announcement, FanDuel revealed that slots are the preferred game for 82% of new casino customers.

DraftKings also has a dedicated live-dealer studio in New Jersey, which it built with the help of Evolution Gaming. While many NJ online casino operators now use Evolution’s white-label product, the custom branding and dealer uniforms for DraftKings’ games set them apart.

What’s next for DraftKings and FanDuel?

The launch of these standalone casino apps will serve as a test run for other markets still to come.

Assuming all goes well, it seems likely that DraftKings will roll out a similar product in Pennsylvania. With its integrated sportsbook/casino app already deployed there, the additional technological and regulatory overhead to launch a standalone online casino should be minimal.

Whether or not FanDuel does the same in New Jersey remains to be seen. It sounds like it, though, as a company spokesperson indicated PA would serve as FanDuel’s blueprint for other regulated US markets.

The next stops for the two companies will presumably be West Virginia and Michigan, both of which legalized online casinos in 2019 but have yet to authorize the first apps. DraftKings and FanDuel already offer multi-channel sports betting in WV under the license of Hollywood Casino and The Greenbrier, respectively.

In Michigan, the first week of legal sports betting was interrupted by the coronavirus outbreak and the shuttering of brick-and-mortar casinos. DraftKings has a partnership lined up with Bay Mills Resort & Casino, however, while FanDuel’s sportsbook will be situated right in Detroit at Motor City Casino.

Both states initially set the first quarter of 2021 as a target launch window for online casinos, but Michigan has since indicated that it will accelerate its timeline due to the possibility of a second shutdown of land-based gambling in the fall. Regulators now say they could be ready to give operators the go-ahead as early as October.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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