Analysis: DraftKings Migration Issues In NH Show Another Monopoly Downside

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DraftKings recently kicked off a nationwide migration to its own platform, starting in New Hampshire.

A spokesperson confirmed the company had “begun testing our technologies in various markets,” notably in the past two weeks. The full migration process to SBTech technology is on track to complete by the end of the third quarter of 2021.

So far, it has not exactly been seamless.

Hiccups for DraftKings in New Hampshire

New Hampshire chose to utilize a monopoly sports betting model after legalizing sports betting in 2019. The state employed a bidding process in which DraftKings won exclusive rights to the market by offering 51% of revenue.

New Hampshire entertained the possibility of multiple operators, though. The platform operated largely without major issue until the migration began.

In fact, the DraftKings site in New Hampshire has seen four hiccups in the past two weeks:

It is not exactly unexpected. Migrations are notoriously tricky, even though DraftKings has been trialing the SBTech platform in Ireland

For instance, FanDuel went through similar issues when it moved onto its own technology. Paddy Power Betfair acquired FanDuel in 2018 and thereafter migrated the company to its platform.

Mo’ monopolies, mo’ problems

However, the outages do illustrate the importance of choice — or put another way, the downside of monopolies.

Some states opted for a model run via the lottery to avoid constitutional restrictions on gambling expansion. A lottery-run system, though, does not require a single-operator model. In Tennessee, for example, the lottery operates an online-only system with multiple sportsbooks.

Bettors in New Hampshire had a frustrating week with no legal sports betting alternative while the Boston Red Sox built an eight-game winning streak.

Many likely have found their way to the illegal offshore market for a bet. Perhaps they went back to their local bookie, alternatively.

Not an isolated outage incident

It’s not like sportsbook outages are black-swan events. Many, including DraftKings in New Hampshire, fell over in the lead up to the Super Bowl.

Last year, Oregon went without a legal betting option for more than two weeks when its monopoly platform provider (also SBTech) was taken down by a cyberattack.

That’s far from an ideal consumer experience. And that experience should be a legislative and regulatory priority, even though it often takes a back seat to tax revenue.

Attempting to migrate bettors from offshore and bookies requires offering competitive odds among companies driven to compete. Absent that, their motivation to switch largely is nonexistent.

Raw deal for US sports bettors

Take New York sports betting for example. Governor Andrew Cuomo wanted to mimic New Hampshire in a bid to raise an unrealistic $500 million in revenue for the state from sports betting. Nevermind whether New York sports bettors got choice or a good experience — those took a backseat to Cuomo’s push to exclude casinos.

Washington DC and Montana are more examples where the consumer gets an awful experience thanks to a monopoly system. Both of those markets chose to utilize lottery provider Intralot for sports betting, with horrendous results to date.

All the time, the black market benefits. Hopefully new states legalizing sports betting think about their consumers as much as the state coffers.