DraftKings Made A Sharp Bet With Kambi Group Partnership

There’s an old adage about the importance of being smart enough to know what you don’t know. DraftKings seems to have a firm grasp on the concept. This week, the company and European sports betting provider Kambi Group announced that the latter will essentially power DK’s sports betting platform under a multi-year partnership.

DraftKings has been ambitious in its sports betting aspirations

Despite no direct experience in the industry, DK clearly had a sports betting launch on its New Year’s resolutions for 2018. That much was evident as early as February, when they announced the hire of a Head of Sportsbook. Naturally, the sports-betting plans that co-founder Matt Kalish recently revealed have been in the works since last summer picked up a full head of steam as of May 14, when the SCOTUS eradicated PASPA. There’s been a few other notable developments involving DK and sports betting since then:

• The company initiated an ad campaign about its forthcoming sportsbook in New Jersey via highway billboards and transit signage.
• Kalish held a Facebook Live chat on May 31. Within it, he announced the company’s intentions to be a serious player in sports betting, even declaring there isn’t a reason they can’t eventually be “number one in sportsbook”.
• DK announced a partnership with Resorts AC for its sports betting initiatives in New Jersey on June 1.
• It was recently reported that DraftKings is seeking $150-$200 million in additional funding for its sports betting operations.

Leveraging expertise, keeping pace with competition

The joining of forces with Kambi is significant in a number of ways, especially for a company dipping its toe into the sports betting waters for the first time. Dubbing itself the “Sports Betting Experience Company”, Kambi, active in six continents overall, brings DK much-needed expertise in the field. Its sole focus is providing other companies with the tools to develop and maintain sports betting platforms. As per its press release announcing the new alliance, Kambi’s 19-customer portfolio includes high-profile clients such as:

• Rush Street Interactive
• 888
• Kindred Group
• Napoleon Games
• Televisa

The move is also prudent from a “keeping up with the Joneses” perspective. After all, FanDuel has made its sportsbook intentions clear as well. Paddy Power Betfair’s recent acquisition of a controlling share in the DFS operator was basically the equivalent of a mammoth neon sign announcing their entry into the space. DraftKings, therefore, needed an influx of both infrastructure and experience to roll out a quality, competitive product. It’s now laid the groundwork for accomplishing that goal and closing the considerable knowledge gap that exists between running a DFS-centered company and a sportsbook.

DK sports betting debut apparently around the corner

One big conundrum that the DraftKings-Kambi partnership faces in the short term is market penetration. Sports betting projects to be legalized at a relatively deliberate, state-by-state pace over the next few years. Kambi can certainly develop a Ferrari-quality sports betting platform for DK, but it may be one that’s forced to sit in the garage much more often than they’d like for the time being. On the flip side, the progressive rollout that the molasses-like pace of legislation will dictate could be a blessing in disguise. The two companies will have a chance to tweak and perfect the platform as needed while it’s still comparably small in scale. That should help ensure it’s ready for prime time in a few years when legalized sports betting is ideally a much more widespread phenomenon. New Jersey will apparently serve as the guinea pig. The press release describes DK’s sports betting launch in the state as “imminent”. The earliest date that they’d be able to officially begin taking online bets is presumably July 10^th. That marks the 30^th day from when the law – which required that waiting period before any brick-and-mortar licensees could offer mobile/online wagering — was officially enacted with Gov. Phil Murphy’s signature. Naturally, DraftKings doesn’t run a brick-and-mortar casino, but they will offer their online sportsbook in the Garden State through Resorts AC’s license. How successful Kambi will be in propping up a company that can rightfully be labeled a sports betting “noob” remains to be seen, however. After all, gaining a serious foothold won’t be a stroll on the AC Boardwalk. From the onset, DK figures to face some stiff competition within New Jersey’s borders in the form of a William Hill-operated sportsbook at Monmouth Park, as well as a potential Paddy Power Betfair-powered and FanDuel-branded sportsbook at Meadowlands Racetrack. Those “DFS guys” at DK have beaten the odds a time or two already. We’re about to find out if they can do it in a new arena.