Combining an operator and a provider will have ripple effects far beyond just those two companies.
The four US operators powered by SBTech: Golden Nugget, Resorts, Churchill Downs’ BetAmerica and Oregon Lottery Scoreboard all will be affected in one way or another, but how exactly?
Little information to glean from call
DraftKings did not specify in an investor call after the deal was announced, only saying that SBTech would continue to operate as a B2B provider, with the combined group benefiting from a “diversified business model.”
The EBITDA projections for the group also include B2B growth, suggesting it will continue to be a focus.
The positive outlook for current partners is that SBTech will be pushed to prioritize the US market for DraftKings with a focus on product and pricing/trading.
However, multiple executives contacted by Legal Sports Report said having your platform provider acquired by a competitor was likely to be a headache. There’s a reason that fellow platform provider Kambi was spun out from its operator parent company Unibet back in 2014.
Potential issues for SBTech partners
The first concern for current partners is that the deal will require a major integration, with DraftKings’ front-end put on top of SBTech’s platform.
“Migration projects with DK and SBTech are not going to happen quickly, so then it boils down to stick or twist for current partners,” said one source with knowledge of the situation.
However, that process is similar to normal client onboarding and unlikely to affect existing operations. It will also not happen until at least December 2020, when DraftKings’ existing contract with Kambi expires.
The bigger issue for partners at that date then could be losing priority on the technology roadmap, with DraftKings pushed to the front of the line.
So, just how likely is each partner to stick or twist?
Resorts has existing links with DraftKings
Given DraftKings is the second-largest operator in NJ sports betting, it’s a safe bet to assume Resorts wants that relationship to continue and will be sticking with SBTech for the foreseeable future.
Churchill Downs’ sportsbook brand BetAmerica is also likely to stay put in the near term, having already launched online betting with SBTech technology in three states: New Jersey, Pennsylvania and Indiana.
Churchill Downs can offer market access for DraftKings to key states like Kentucky, as well as US horse racing expertise, should DraftKings go down that route. This suggests the two firms have plenty to gain from staying connected closely.
Golden Nugget has least to lose
Golden Nugget has arguably the fewest ties with DraftKings/SBTech and perhaps the least to lose. Sports betting revenue on the Golden Nugget license, which also includes BetAmerica, were just $164,000 in November.
Golden Nugget is understood by LSR to have looked at alternative sportsbook platform options already. Its online platform and casino tech in New Jersey is provided by SG Digital, which also owns the OpenBet sportsbook platform.
An extended deal between those two could make sense down the road, but it’s worth remembering the DraftKings/SBTech deal isn’t expected to close until Q2 2020, and there will be no major impacts on the operators until then.
Instead, look for operators to have potential alternatives in place for the start of football season in 2020.