DraftKings CEO Expects Sports Betting to be Main Business

DraftKings CEO Jason Robins said his daily fantasy sports company is in a transition phase and sports betting will be a bigger part of its business “in the next 2-3 years.” DraftKings’ co-founder and CEO said it will take 10 to 12 U.S. states to legalize sports betting before his company’s main focus will become sportsbook operations.

Robins, who founded DraftKings in the fall of 2011 with several of his Boston friends and roommates, spoke to Yahoo Finance this past week as the NFL regular season fast approaches.

The return of the NFL season means a new wave of players signups at DraftKings, along with a bunch of old user account re-activations. For DraftKings, NFL football is the most lucrative time of the year, due to the sheer popularity of American football in the United States.

2018 DraftKings DFS Promotions

For the 2018 NFL season, DraftKings is planning its biggest year ever. Jason Robins said the Boston-based company plans its biggest prizes ever this year. DraftKings also is rolling out its latest DFS product, Flash Draft, which allows players to draft a new roster during the middle of an NFL game.

Flash Draft is the daily fantasy sports version of a live/in-play sports betting app. Flash Draft should make DraftKings more lucrative, because an individual customer can enter a new wave of contests halfway through a set of NFL games.

Previously, they had to wait until the late afternoon games began — or until next week.

Blurring the Lines: Sportsbooks and DFS Sites

The Flash Draft method of DFS gaming also shows how much traditional sports betting and daily fantasy sports borrow from each other these days. For years, Jason Robins and his rival at FanDuel, Nigel Eccles, insisted that DFS gaming had little in common with sports betting. They wanted to keep their gaming separated legally from sportsbook betting, because such sports bets were illegal in 46 US states.

Then the US Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), which banned sports betting in all US states but Nevada, Oregon, Montana, and Delaware. Since the May 14 Supreme Court decision, several states have moved to legalize single-game sports bets: Mississippi, Nevada, and Delaware.

US States to Legalize Sportsbooks

More states are expected to legalize single-game sports betting, which are the types of bets most gamblers prefer. West Virginia, Pennsylvania, Connecticut, New York, Michigan, and Louisiana all have introduced sports betting bills or discusses the possibility in public hearings.

Once a critical mass of those states — or other states like them — legalize sports betting, it will change the way DraftKings does business. Sports betting will become more lucrative than daily fantasy sports, making a billion-dollar business into a multi-billion dollar business.

2 to 3 Years Before DFS Is Surpassed

Jason Robins explained, “It’s probably some time in the next 2-3 years, would be my guess. It all depends how quickly the states roll out. That’s really the variable…After you see 10-12 of them doing it, at that point you’ll start to see the lines cross.”

Robins said he sees a “halo effect” in the daily fantasy sports industry. Many American sports enthusiasts are excited by all the news about legal sports betting, even though such betting is not legal in most US states. To vent their excitement, gamers enter real money daily fantasy sports contests — which bring a similar kind of satisfaction to those who can predict NFL games.

DraftKings New Jersey Sports Betting App

Because the critical mass has not been reached, Robins said DFS owners are focused on fantasy gaming. As Yahoo Finance put it, DraftKings and FanDuel are a consolation prize. Robins added, “Right now it’s still a very small portion of the U.S. population, so it’s still all about fantasy.”

DraftKings has taken advantage of the permissive sports betting environment as much as it could. The company launched the first mobile sports betting app in New Jersey, which was followed quickly by MGM Resorts’ own sports betting app, PlayMGM.

The launch of the New Jersey mobile sports betting apps are indicative of the competition the US Supreme Court unleashed with its sports betting decision. Some companies are merging. Others are signing strategic partnerships. All are rushing to launch new products. Everything is done to get in on the ground floor of a massive new expansion of the US gaming industry.

Where FanDuel and DraftKings once seemed to be in danger due to the wave of regulations and gaming bans in 2015 and 2016, now they are preparing for a brave new world in which they become top US bookmakers. One might see more commercials like the one depicted above, which FanDuel and DraftKings were in a mad competition to become the No. 1 daily fantasy sports site in America. (Note: The man depicted is not Jason Robins, but a paid actor, from a time when DFS ads seemed ubiquitous.)

Paddy Power-Betfair and FanDuel Merger

For the time being, competitors FanDuel and Paddy Power-Betfair merged back in the spring. Those two companies now offer sports betting through the Meadowlands Racetrack, while FanDuel is producing sports betting related programming on Betfair’s US networks, TVG and TVG2. It won’t be long before FanDuel produces its own sports betting app, one can predict.

As Jason Robins noted, “The handcuffs have been taken off, at least in New Jersey or anywhere else that legalizes it. Now we can pretty much do almost anything. Forgetting even the traditional sportsbook stuff, I’m most excited about the types of new products, things that people play in their offices, Super Bowl squares, March Madness brackets, there’s all kinds of stuff that previously had to happen underground.”