Caesars Partners With DraftKings In Multi-State Sports Betting Agreement
Caesars Entertainment and DraftKings partner to expand sports betting wherever it is legal.
For a moment there it looked like DraftKings would be left behind in the race to secure sports betting deals between online operators and major casino groups. Not any more, Caesars and DraftKings have announced a major partnership that will operate across the US.
Per the press release:
“Caesars will offer DraftKings market access for its online gaming products, subject to passage of applicable laws and the parties securing applicable gaming licenses. DraftKings' market access is exclusive to Caesars across certain states in which Caesars operates casino properties.”
DraftKings is the market leading online sportsbook in New Jersey
DraftKings launched the first mobile sportsbook in New Jersey back in August 2018. Since then every month, it has posted the highest revenues of any operator. Brand recognition appears to be playing a major role in sports betting success.
As a Daily Fantasy Sports (DFS) operator, DraftKings is active in 44 states across the Union. Its main DFS competitor FanDuel is currently number two in New Jersey. Mark Frissora, President and CEO of Caesars Entertainment alluded to DraftKings' nationwide presence in his comment on the deal:
"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."
The newer online entrants such as GVC partnered with MGM, and The Stars Group partnered with Eldorado, can’t offer the same level of brand recognition in the new sports betting markets.
The benefits swing both ways, so DraftKings will also promote Caesars in states where the two work together.
The deal shouldn’t affect Caesars’ existing partnership with Scientific Games. Caesars has kept the right to offer its own branded sports betting and online casino apps.
FanDuel sold out to Paddy Power Betfair
The deal press release adds one little line that could have an interesting future significance. "Caesars Entertainment will receive DraftKings equity,” meaning Caesars is taking an ownership stake in DraftKings. How much is not specified, but if it is material we should hear about it from an SEC Filing or during the next quarterly earnings release.
European operator Paddy Power Betfair (PPB) bought FanDuel in May last year. Previously FanDuel had tried to merge with DraftKings, but failed. PPB is now using the FanDuel brand to spearhead its own entry into the broader US market.
DraftKings without a major backer looked rather small to take on the US casino industry. Now with Caesars as a partner it looks much more credible that it can repeat its New Jersey success in other states. If all goes well, Caesars may be tempted to try to increase its stake.
Jason Robins, CEO and Co-Founder of DraftKings was pleased to find such a powerful casino partner:
"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."
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