Kambi announced early Thursday an extension of its New Jersey sports betting contract with DraftKings Sportsbook, as well as a major expansion.
The UK-based back-end operator provided little detail about the arrangement, declining to disclose either term or financial commitment. The new setup clearly solidifies Kambi’s position in the DraftKings Sportsbook universe though.
The most important piece of information, however, resides with DraftKings: what happened to the SBTech deal?
Is the SBTech purchase still on?
The Kambi news leaves the status of the deal in serious question. A DraftKings representative did not return a request for comment and a Kambi rep declined to discuss the situation.
Legal Sports Report learned in June of DraftKings’ plans to acquire SBTech. DraftKings did not deny the report when asked about it by LSR:
“DraftKings speaks to a variety of companies regarding various matters in the normal course of business, and it is our general policy not to discuss the specifics of any of those discussions.”
By acquiring platform provider SBTech, it appeared DrafKings could allow the operator to bring its trading services in-house. It also would provide DraftKings with full control of an online betting platform.
The purchase price reportedly would fall between $300-500 million.
Reading between the lines
A snippet from Kambi’s recent Q2 earnings call might provide a bit of insight into the company’s thought process:
Analyst: “… if we say, you wouldn’t have DraftKings, could you more easily take on-campus 50 new customers versus if you have DraftKings? Because I assume if the SBTech DraftKings then you actually would have pull-through SBTech would probably be the next — DraftKings would probably not let SBTech to the south of B2B Sportsbook in the U.S.”
Kristian Nylén, Kambi CEO: “Yes, that’s an assumption, and I think it’s possibly likely but we will waive out SBTech as comparative. I think we feel that so far, we have been winning a lot of very, very strong deals outside of DraftKings and I strongly believe that we will continue to be the B2B supplier that will win many of the attractive deals in new states to come.”
Kambi and DraftKings Sportsbook still good?
The first year of the Kambi arrangement with DraftKings Sportsbook proceeded with relatively little public attention beyond a snafu with the Sports Betting National Championship. Kambi helped DraftKings Sportsbook to open the first NJ sports betting app last year.
News of the rumored SBTech deal tanked Kambi stock close to 20% in June. After word arrived of its new contract with DraftKings, Kambi erased more than half of those losses in Thursday trading:
Interestingly, Kambi’s huge tie-up with Penn National did not provide nearly the same bump last month. DraftKings also made a deal of up to 20 years with Penn National within the casino group’s major set of moves, expanding into a handful of new states.
What’s in the Kambi deal with DraftKings
The extension of Kambi’s relationship with DraftKings Sportsbook in NJ sports betting represents the stabilizing force within the deal. Its reach could extend far beyond the Garden State though.
Kambi will back DraftKings Sportsbook’s trading in these new states, as they become legally approved:
- New York
- West Virginia
What they’re saying about the deal
“Over the course of the past 12 months, Kambi and DraftKings have developed a symbiotic relationship, working closely together to deliver a high-quality sportsbook, which has only improved over time.
“I’m delighted the extension of our relationship through this new agreement will enable players in other states to enjoy the same exciting sports betting experiences that have helped DraftKings become a market leader in New Jersey.”
Jason Robins, DraftKings Chief Executive Officer:
“Kambi has been a key partner for DraftKings, providing us with backend sportsbook technology that has enabled us to offer our customers an engaging product in a highly competitive market.”