DraftKings Preps for New York Sports Gambling With Casino Deal
(Bloomberg) -- Sports betting hasn’t yet come to New York, but companies are jockeying for position now.
The latest is daily fantasy sports giant DraftKings Inc. As part of its expansion into traditional sports wagering, the company says it has agreed to operate the sports book at Del Lago Resort & Casino in Waterloo, New York. The agreement also allows DraftKings to a launch state-wide online and mobile app once the laws allow.
Sports gambling is expected to be a second act of sorts for daily fantasy companies DraftKings and FanDuel Inc., which in their early years grew exponentially, raised hundreds of millions from venture capital firms, and inundated sports fans with ads promoting their million-dollar prizes. In the past few years, however, facing legal headwinds, a failed merger and slower growth, the prospect of offering traditional sports gambling has grown more alluring.
By the time the U.S. Supreme Court struck down the federal ban on sports gambling this May, DraftKings had already hired a “head of sportsbook,” and spent more than six months developing a sports gambling product.
New York is important to companies looking to gain a foothold in the burgeoning U.S. market. Not only is it expected to offer sports gambling as early as next year, it is projected to be the county’s second-largest sports betting market, according to a recent study compiled by the American Gaming Association, trailing only California.
Many states leave gambling licenses to their brick-and-mortar casinos, which means deals like these are requirements for industry newcomers. Paddy Power BetFair Plc, whose U.S. business just merged with FanDuel, recently signed a similar partnership with New York’s Tioga Downs Casino Resort. DraftKings also has a partnership with Resorts Casino Hotel in New Jersey.
New Yorkers likely will have to wait until next year to make legal wagers within the state. Despite a late push to reach an agreement, the New York general assembly’s legislative session ended on June 20 without a new sports betting law.
Identical bills in the house and senate proposed operating gaming through partnerships with the state’s casinos, along with a mobile option, an 8.5 percent tax rate -- on the low end of what many states have considered -- and a 0.25 percent “integrity fee,” the controversial royalty sought by major leagues like the NBA and MLB.
Del Lago, located in New York’s Finger Lakes region, is one of just four commercial casinos in the state. It is jointly-owned by Peninsula Pacific Strategic Partners and Wilmorite Management Group.
Draftkings’s online product, which will allow users to gamble and play fantasy sports out of the same account, will likely start first in New Jersey. Co-founder Jason Robins posted a first look on Twitter last week. The company, which had $190 million in revenue last year, is also raising money in what’s expected to be its final investment round before a possible initial public offering.
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