DraftKings Hints At Becoming A Legal US Sportsbook Down The Road: How Exactly Would That Work?

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DraftKings CEO Jason Robins at least hinted at the idea that his daily fantasy sports company could eventually take a look at being a part of a future legal sports betting market in the US.

DraftKings and the future of sports betting?

Robins was attending the Web Summit in Portugal; you can see an interview with him here. At the summit, DraftKings announced that it would be providing live streaming of EuroLeague games. DraftKings and the pro basketball league signed a deal this summer.

There was also this nugget:


That’s pretty vague, but that DraftKings (and FanDuel, for that matter) would be interested in a potential US sports betting market shouldn’t shock anyone.

Both companies sent representatives to the Global Gaming Expo — the world’s largest gaming conference — in Las Vegas last month. And while that had something to do with their DFS products, it’s foolish to think that’s the only reason either of them was there.

There are a lot of “ifs” about the legalization of sports betting. And there are plenty of reasons why DFS sites will find it challenging to become sportsbooks in the short term, if sports wagering becomes legal. But they also have some advantages.

First off, how would a DFS site as sportsbook work?

There are a lot of questions about how a rollout of legal sports wagering will go down in the US. But the most likely scenario is state-by-state regulation if New Jersey wins its US Supreme Court case involving sports betting.

Sports betting becoming legal nationwide would take a new law and a federal framework from Congress, something that is still difficult to envision in the short term.

That leaves an environment where sportsbooks go live piecemeal around the US, as new state-level laws go on the books (like the one we just saw in Pennsylvania).

So what’s the path of least resistance for DraftKings to become a sportsbook if that happens?

States are likely to give sports betting licenses to already-licensed gaming entities, or allow them to conduct sports gambling, in that scenario. Those casinos, horse racing tracks, etc. could then provide single-game sports betting. Those entities would likely partner with companies that specialize in running sportsbooks. (See the Nevada sports betting industry, for example.)

That leaves an opening for DraftKings to partner with a company that already has a sports betting platform and leveraging its database of US users. (That’s more than 4.5 million actives and eight million total registered users, according to the company earlier this year.)

Anyway, that’s just one plausible scenario of how a DFS site could get involved with sports betting.

There are still real-world problems of putting DFS and sports betting next to each other

Despite that possible path, there are myriad problems confronting DFS platforms getting into the sports betting business. Here’s a short list of the issues:

And that’s not an all-inclusive list of potential stumbling blocks.

The potential for sports betting is immense in the US

There’s little doubt that DraftKings would benefit from becoming a sportsbook down the road. You only have to look at the numbers from Nevada in September to see why.

Nevada sportsbooks handled over half a billion dollars in that month alone. That would be roughly a quarter of what DraftKings handles in the entire world for the entire year. (Here’s a primer on handle vs. revenue, lest anyone confuse the two things.)

The ceiling for sports betting is undoubtedly higher than the current market for DFS. That’s why, at some point, you’re likely to see more of an effort on this front from the established DFS industry.