The international expansion will occur sometime during Q1, Jeffrey Haas, chief international officer for DraftKings, told Legal Sports Report.
It marks the first expansion of DraftKings’ footprint since DraftKings UK went live about a year ago.
DraftKings, Malta and Germany
The core news is that DraftKings announced it had acquired a “Controlled Skill Games License” from the MGA. That is a new type of gaming license — apart from gambling licensing — that specifically looked to account for DFS.
Acquiring the license obviously allows DraftKings to operate in Malta, a small country with just about 400,000 people. But it also allows it access to other markets. An MGA license can be used to provide a legal basis under European Union law for operating in any EU member state.
For now, DraftKings indicates that expansion will only include in Germany, but in the future the license “will enable the company to operate in additional European countries.”
“We are excited to embark on this important phase of our international expansion,” said DraftKings co-founder and CEO Jason Robins. “We are pleased that Malta has recognized the need for special licensing of daily fantasy sports and other skilled based games. The Malta Gaming Authority is an innovative organization and it is clear that they have put a lot of thought and rigor into this process.”
DraftKings did not reveal specific plans to offer DFS in any other country. However, Haas did offer that DraftKings would likely “increase our addressable audience by at least 100 million people.”
The market for DFS in Germany
The top-line figure: DraftKings adds a country of 80 million people to its potential user base.
“We feel there is a tremendous market opportunity for DFS in Germany,” Haas said.
The plan for DK in Germany is to look much like the product the rest of the world sees. Liquidity in Germany will be shared across the DraftKings platform. That increases the potential player pool in all jurisdictions DraftKings serves.
“As we look at our international road map, our intent is to prioritize markets where we can share liquidity,” Haas said.
DFS will largely be a new concept for Germany, so it is difficult to gauge the market potential off the bat. However, German sports fans do follow a number of sports that DraftKings offers, including soccer, golf and basketball.
More regulation, international expansion for DFS
The move puts DraftKings under another regulatory regime. It holds a gambling license with the UK Gambling Commission. It is also registered or licensed in a variety of states that passed laws in 2016.
“Malta’s intention to regulate digital skill games with a prize was first announced in December 2014 when the MGA published a consultation document,” said Joseph Cuschieri, executive chairman of the MGA. “From then onwards, the MGA sought the input of various industry stakeholders and experts in order to develop a framework which facilitates the development of the sector, while ensuring adequate protection for players and fairness of the games.”
Previously, DraftKings and FanDuel had limited their reach to North America and the UK. The two DFS operators added the latter jurisdiction in 2016. The two companies will likely merge sometime later this year.
The plan does not appear to include large ring-fenced markets for gaming such as France, Italy and Spain, for now.