DraftKings Takes A Bold, Yet Ironic Step Into Sports Betting

Juan Carlos Blanco March 4, 2018 479 Reads

With its latest hire, DraftKings just put a unique spin on an old saying — even when you beat ‘em, join ‘em!

After years of trying to beat back perceptions – often successfully, in terms of its legislative agenda — that their daily fantasy sports (DFS) product equates to a form of gambling, the company recently revealed a new position within its management structure that removes any ambiguity about DraftKings’ official entry into the sports betting realm.

Sean Hurley, who boasts multiple years of experience in senior operational roles for various companies within the iGaming industry, has been announced as the company’s first-ever Head of Sportsbook. Hurley comes to DraftKings from Amelco, a London-based company that supplies gambling software to the regulated UK gaming market.

Oh, the irony

The Feb. 26 announcement represents DraftKings’ clearest signaling of intentions to not only enter a potential future U.S. legalized sports betting environment, but to be a major player within it.

Notably, the considerably successful DFS legalization efforts spearheaded by DraftKings and fellow industry heavyweight FanDuel over the last several years have hinged precisely on their gaming products being exempt from gambling designations.

Thus, there’s no shortage of irony in the most successful company in the space openly acknowledging their plans to enter a potential future U.S. legalized sports betting environment.

New Jersey presence

In its press release announcing Hurley’s hire, DraftKings also revealed he’ll be based out of a brand new office in Hoboken, New Jersey.

That location is certainly not without significance, considering the Garden State has been the epicenter of sports betting legalization efforts for several years. It also stands to be the first state outside of Nevada to offer single-game sports betting if the Supreme Court rules in its favor in the landmark Christie vs. NCAA case.

Potential ramifications for DFS

The industry’s aforementioned legislative push has essentially been successful 18 times over, with 16 additional states currently considering DFS legalization/regulation bills thus far in 2018.

Would a new sports betting division hurt the perception of DraftKings’ DFS product in the eyes of lawmakers considering current and future legislation? That will vary on a state-by-state basis, and industry lobbyists will likely often be tasked with explicitly outlining the distinct differences between the two offerings to legislators.

DraftKings is fully expected to continue striving to remain atop the DFS landscape, even as there are indications that new user acquisition, handle and revenue may all be plateauing over the next several years.

Therefore, ensuring sports betting and DFS aren’t conflated in the minds of legislators will very likely be a key point in the industry’s lobbying strategy moving forward.

How much customer overlap for sports betting?

DraftKings certainly didn’t get to the mountaintop once by being slow on the uptake. They’re well aware that a considerable chunk of their existing player base already places conventional sports betting wagers through any number of presently “illicit” methods in addition to playing DFS contests.

Sure, there’s a certain percentage whose real-money play with respect to sports has been strictly limited to fantasy. But let’s keep it real – those who like having a little action in the games they watch often enjoy doing so through more than one method/source.

Consequently, this shapes up as a potentially shrewd endeavor in the long run. Provided, of course, that there’s a decision favorable to widespread legalized sports betting handed down in Christie vs. NCAA.

Subtle differences: The crossover elements between sports betting and DFS have always been present. This is true irrespective of the lengths that operators and lobbyists have gone to make sure the two are not deemed identical. And on that last point, they’re technically correct.

In the case of DFS, participants are weighing many of the same metrics before finalizing lineups as sports bettors might before placing wagers. However, a key difference with DFS is that analysis is principally done on the player level. Conversely, single-game game sports betting and its offshoots call for the adoption of a holistic, team perspective.

Moreover, due to a DFS lineup consisting of players from any number of teams, participants are typically tasked with researching a multitude of games. This in contrast to their sports betting counterparts, who may conceivably wager on only one or two games in any given slate.

But plenty of similarities, too: That being said, it’s certainly arguable that the research methodology involved in DFS lineup construction – which is often cited to help buttress the industry’s skill game argument – is essentially a drilled-down, microcosmic version of the prep involved before placing a single-game wager or parlay bet.

There’s undeniably a substantial overlap in terms of statistical benchmarks reviewed. Over/under figures, projected team totals and point spreads are just three foundational elements of sports betting research that have long been part of DFS research.

They’re not throwaway stats by any means, either. The degree to which those numbers move as the onset of a game approaches is often a subject of considerable interest to many DFS participants. Notable swings in either direction can often serve as tie-breaker between two players under consideration, or they can cement a decision to go heavy or light on players from a specific team or game.