DraftKings Takes Early Lead In Sports Betting Competition, With FanDuel Playing The Long Game

The Breakdown

• DraftKings has a molopoly, for the time being, with regard to online and mobile sports betting in New Jersey. It was the first to launch its product in the Garden State and is getting a major leg up on the competition without any alternative options at the moment.
• FanDuel is more focused on a more long-term game, locking up casino operator agreements in 15 states, compared to the 2 states that DraftKings currently has access to via similarly styled arrangements.  (Source: Eilers & Krejcik Gaming LLC).
• FanDuel and DraftKings are still very much involved in daily fantasy sports, despite shifting substantial resources to sports betting. In June 2018, FanDuel brought in $4.83 million and DraftKings earned $5.14 million in DFS revenue in Pennsylvania, respectively. (Source: Eilers & Krejcik Gaming LLC).

Some Color

There has been a rush by states to consider sports betting laws and regulations since the U.S. Supreme Court struck down the federal prohibition on sports betting that was previously known as the Professional and Amateur Sports Protection Act (PASPA). Delaware was the first state to legalize sports betting within its borders, and was followed by New Jersey. Recently, Mississippi has started allowing sports bets as well.

The first state outside of Nevada to begin allowing sports betting through online and mobile devices is New Jersey, and operators have also been working hard to get their products ready for consumer use. While FanDuel, MGM and Caesars should all be expected to launch their platforms, DraftKings is off to an early and strong lead.

The DraftKings Sportsbook mobile app is currently the only one available in the New Jersey marketplace and it is eating up market share while grabbing all of the attention in the red hot sports betting space. DraftKings had been working on developing its Sportsbook mobile app for roughly a year and was ready to pounce. It should now be rewarded for same.

It appears that DraftKings’ long-time competitor FanDuel is taking the long-term approach and is willing to let DraftKings get a head start while it continues to test its own platform. Meanwhile, FanDuel is busy racking up agreements with casino operators in other states so that it has access once the doors open there as well.

While DraftKings has access to only 2 states via casino operator agreements, FanDuel has already acquired access to 15 states through similar contracts, per Eilers & Krejcik Gaming’s August 2018 Daily Fantasy Sports Tracker presentation. That provides DraftKings with a potential market of 8.9% of the U.S. population; FanDuel’s arrangements give it a reach to 36% of the U.S. population. It is expected that DraftKings makes up the gap in the future.

The Quote

“We have put immense thought and significant resources behind the development of DraftKings Sportsbook and I’m confident that sports fans in New Jersey will enjoy using it to make the experience of watching the games even more interesting and thrilling.” – Jason Robins, CEO and co-founder of DraftKings