Caesars Entertainment Corp. and DraftKings are all-in on an online gambling and sports betting deal.
On Monday, the two companies announced a deal under which Caesars will assist DraftKings with market access for its online gaming products in exchange for an undisclosed equity stake. Caesars operates casinos in 14 states, and the presence of many of those brick-and-mortar properties will give DraftKings a foothold to potentially obtaining regulatory approval.
“Caesars’ agreement with DraftKings, their first multi-state partnership, brings together the established leaders in gaming, daily fantasy sports, and sports betting to provide customers more options,” Mark Frissora, President and CEO of Caesars, said in a statement.
“This alliance is the latest initiative by Caesars to capitalize on our database, generate a new revenue stream in a growth market and raise our profile in sports, in part by creating new sports-themed guest experiences at our resorts across the country,” Frissora added.
Prior to the deal, Caesars and DraftKings were effectively rivals. Both operate in the state of New Jersey, where DraftKings is the industry leader in mobile sports betting revenue. The Boston-based company, which started off as a daily fantasy sports powerhouse, also offers online casino games in the Garden State.
DraftKings moving fast
Moving quickly into emergent state markets is what DraftKings wants. Currently, just eight states have active sports betting markets, with more than two dozen others considering legislation.
“Partnering with such a world class gaming organization will expedite our national roll-out process and give us the opportunity to work alongside one the largest and most established industry leaders in the world,” Jason Robins, CEO and co-founder of DraftKings, said in a statement.
The states Caesars could help DraftKings out the most with are likely Illinois and Indiana, both of which possess large untapped markets and are serious about allowing mobile sportsbooks. Those mid-western states both have sports betting proposals on the table in 2019. Caesars has six casinos between Illinois and Indiana, giving it a long regulatory history in those jurisdictions.
Under the deal, DraftKings will “promote” Caesars as its official brick-and-mortar casino partner, in states where the companies are collaborating. That designation will be important to present to regulators.
The partnership does not mark the end of Caesars’ own online gambling products. Caesars will continue to offer its own branded sports betting and online casino apps where it’s licensed to do so.
Caesars has about 55 mm gamblers in its database. DraftKings has about 10 mm.
The U.S. commercial casino lobby estimates that about $150 billion is bet on sports each year. Thanks to last year’s Supreme Court ruling, the white market has slowly started to capture a share of the black market.