This post has been updated.
DraftKings and Caesars Entertainment announced a deal on Monday that will bring the DraftKings Sportsbook into all the states in which Caesars operates casino properties, which is a lot, and some big ones. Those states include California, Illinois, Indiana, Louisiana, Maryland, Missouri, Nevada, Ohio and Pennsylvania, among others.
The publicly traded Caesars Entertainment Corp. has faced struggles and emerged in 2017 from two years of Chapter 11 bankruptcy proceedings. First reported by Bloomberg, Caesars gains in this deal an undisclosed equity stake in the Boston-based DraftKings.
But for an international gaming giant like Caesars, sports betting doesn’t really move the needle. Slot machines do. For DraftKings, which has quickly gone from DFS juggernaut to an emerging sports wagering powerhouse (particularly in New Jersey), they’ve now solved one of the biggest issues that may have stifled its growth: ensuring it can operate in new U.S. states that have or will soon legalize.
For DraftKings, all about market access
For quick background: the way sports betting legalization is going in the U.S., existing brick-and-mortar properties are getting access to sports wagering licenses from state gaming regulators. Neither DraftKings nor Tommy’s Online Sportsbook will get approved by the New Jersey Division of Gaming Enforcement to operate a sportsbook. They have to partner with an existing, license casino property or racetrack. Other new states to legalize including Mississippi, Pennsylvania and West Virginia are following the same model. Bills in Massachusetts and Virginia, if passed, might open the game up a bit for online-only entities, but it hasn’t happened yet.
And speaking of Pennsylvania, with regulators set to allow PA mobile sportsbooks to launch sometime in the near future, DraftKings potentially has its partner with this Caesars deal: Harrah’s Philadelphia is located in Chester, Penn. Unlike in New Jersey, where licensees can have up to three online sportsbook “skins” (or brands), Pennsylvania’s law only allows one apiece.
In an earlier version of this story we speculated that Harrah’s would allow DraftKings to use its skin to go online, however Gambing Compliance reported (paywall) on Tuesday that Caesars will operate its own sportsbook through the Harrah’s, its only property in the state, per a Caesars spokesperson. If that stands, DraftKings will have find another partner among a dwindling number of potentials.
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But elsewhere, Caesars will help place DraftKings Sportsbook in various states where it operates, including in some of the probably-maybe-soon-to-legalize states, such as Illinois and Indiana. If not this year then likely next. The companies will combine their databases and DraftKings will be pushing Caesars’ other gambling offerings to DK players, such as slots, poker and online casinos.
FanDuel and FanDuel Sportsbook executed a deal in August 2018 with the same market access idea in mind, when it hooked up with Las Vegas-based Boyd Gaming Corporation. Boyd Gaming has a Pennsylvania property (Valley Forge Casino) and properties in 15 states, many of the same where DraftKings will now have access, via Caesars. Indeed, they’ll be competing almost everywhere. Which is good for them and good competition for U.S. sports bettors, too.