Caesars Gets DraftKings Stake in Sports-Betting Partnership
(Bloomberg) -- Caesars Entertainment Corp. and DraftKings Inc. are teaming up in a deal that will give the internet betting company an easier path toward online and mobile gambling rights across the country.
Caesars is receiving an undisclosed equity stake in DraftKings as part of the deal, the companies said Monday. The largest owner of casinos in the U.S., Caesars will also get a cut of DraftKings’ gambling revenue in states where the partnership is in force. At the same time, the casino owner is being pressed to put itself up for sale by major investors including Carl Icahn.
The deal gives DraftKings, which is an early leader in legal online sports betting but owns no physical properties, a path toward future online and mobile licenses through the vast network of Caesars casinos. The casino operator has 37 properties in 14 states.
Though rules differ by state, many jurisdictions have given brick-and-mortar casinos the right to sublicense mobile and online gaming rights. In New Jersey, for example, DraftKings partnered with Atlantic City’s Resorts Casino Hotel. The company has a similar deal in New York with del Lago Resort & Casino awaiting the start of sports betting there.
The Caesars partnership makes the process easier for DraftKings. If Caesars has a casino in an area, DraftKings should be able to offer sports bets and nonsports gambling, such as online poker, slots and roulette, for states that allow it.
Caesars will retain the right to offer its own branded sports-betting apps and online sportsbooks in the same states where it’s helping DraftKings gain access.
Legal sports betting is currently offered in eight U.S. states, with more than a dozen others considering legislation this year. Gambling-research firm Eilers & Krejcik Gaming estimates that the market could reach $6.5 billion in revenue by 2023 as more states come on board.
Originally launched as a website for daily fantasy sports, DraftKings was among the first companies taking bets in new markets following the Supreme Court’s landmark 2018 decision. More than eight months into taking bets in New Jersey, DraftKings and rival FanDuel Inc. are by far the state’s two largest online operators.
The industry publication Legal Sports Report said last July DraftKings was looking to raise $200 million at a $1.5 billion valuation.
Caesars, which has 55 million customers in its rewards program, has been among the more active companies in the growing sports-betting industry. It recently became the NFL’s first-ever casino partner at a cost of roughly $30 million a year, and has a branded lounge in the Prudential Center, the home of hockey’s New Jersey Devils. Its casino brands include Harrah’s and Horseshoe.
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