What do New York sports betting and a hypothetical DraftKings poker product have in common?

How Legal Online Poker Could Help New York’s Quest For Mobile Sports Betting, And Vice Versa

Online poker legalization efforts will gain momentum from the groundswell of online sports betting legalization in the US, predicts one gambling industry strategist. That will benefit New York, which could potentially legalize online gambling in 2021.

These predictions came out of a webinar on Mar. 16 titled The State of New York Betting – A Discussion with Industry Experts. One of those experts was Chris Grove, a Las Vegas-based gambling industry strategist and investor. Grove was the original founder of Online Poker Report and Legal Sports Report prior to their sale to Catena Media, which hosted the webinar.

“Honestly, fantasy sports and now a rash of peer-to-peer products that all rest on the skill concept – those are opening the door wider and wider for what’s acceptable,” said Grove. “And I think at some point, poker will be able to raise its hand and say, ‘Let us through that door,’ as well.”

Casino games are an uppercase G for ‘gambling’ to US lawmakers

In the US, legalization of sports betting has opened the door for other forms of  legal online gambling. That’s because many Americans tend to think of sports betting as gambling with a small “G.” Some have no negative feelings about it at all, according to Grove. That makes it easier for lawmakers to legalize sports betting first, after which other verticals don’t seem as scary.

Conversely, casino games are the big “G.”

“We have a chance this year,” opined Dustin Gouker, the US head of content for Catena, on the subject of legalization of online gambling in New York.

Gouker said that New York is a huge market. Currently, gamblers often take the train to go play in casinos across the border in New Jersey.

Why talk about New York’s online poker possibilities?

“I think poker is closer to sports betting than it is to slots,” Grove said.

If online gambling were to become legal in New York this year, many online gambling organizations will look to the Empire State to continue their already meteoric growth. For instance, Flutter Entertainment is considering a spinoff and IPO for its primary US brand, FanDuel, which is valued at $11 billion. DraftKings recently took on $1 billion in new debt that it can use in mergers and acquisitions, as well as product and tech purchases.

Grove said organizations in the online gambling space need to grow to maintain their valuations. Online poker may be small in revenue terms, but it would go a long way for customer acquisition.

“I also think,” Grove continued, “a poker customer is especially of interest to some of those stakeholders that we mentioned earlier. Obviously, especially of interest to Flutter. I believe you’re going to see DraftKings make a significant move into poker within the next couple of quarters.”

Is DraftKings Poker coming soon?

DraftKings already has some history in the poker world, but is best known for its daily fantasy sports platform, and more recently its online casino and sportsbook offerings.

Grove added:

“I think that as you see sports betting competition intensify, the logic, the rationale and the momentum for a poker product to sit alongside sports betting, provide a cross-sell door into sports betting and provide an engagement amenity for existing customers, that’s all going to increase. And again, you go back to that question of, ‘How do we generate growth? What does DraftKings need to do to keep its valuation afloat?’ It needs to show topline growth and it needs to show KPI growth. And the biggest KPI growth point that they can demonstrate, I think, is new depositing users, total active users. Somewhere in there. Poker is a great way for them to expand that in an asymmetrical manner. Because not every one of the 25, 30 brands that are currently contesting online sports betting in the US are going to make the jump into poker.”

Webinar moderator Jessica Welman, Catena’s New Markets Director, noted that the company originally laucnhed PlayNY.com to monitor specifically whether online poker would happen in New York.

DraftKings’ relentless expansion continues

Grove said DraftKings may be attempting to bring products and technology in-house. The goal is to create a seamless, integrated online gaming experience. Part of that may include developing or acquiring a poker platform.

There has been a great deal of speculation about what DraftKings intends to do with its newfound capital. One acquisition target it may be considering is poker pro Phil Galfond’s brand Run It Once. RIO provides online poker player training from industry thought leaders, and also includes a real money poker platform with some innovative features like its Splash the Pot rakeback system.

Even if a RIO acquisition is in the cards, it would not cost nearly the full billion. Other speculated targets include Canadian sports betting/sports media company theScore, sports media startup Meadowlark Media, or even the X Games.

Acquiring or partnering with some sort of media brand may be essential to competing in the US market. DraftKings would be following in the footsteps of competitors like Penn National Gaming, which acquired Barstool Sports and launched a casino and sportsbook under that brand, and The Stars Group, which created Fox Bet in partnership with Fox Sports.

DraftKings holds a market share of 30% of US online sports betting and 19% of US iGaming, but would like to expand that further.

On March 9, DraftKings representatives told investors during a webinar of its own that its in-house bet engine was proceeding on-schedule. Following migration, the company expects to be fully in control of its online sports betting product.

Watch the Catena NY Sports Betting webinar



- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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