DraftKings Likely Can’t Avoid Adding An Online Casino In New Jersey

Posted on August 10, 2018

DraftKings scooped the rest of the New Jersey gaming industry by being the first to launch a mobile sports betting app in New Jersey.

But competitor FanDuel may beat them to the punch when it comes to an NJ online casino.

To date, DraftKings hasn’t mentioned adding an online casino. But FanDuel, now owned by online gaming giant Paddy Power Betfair (PPB), has been open about its intentions since early July.

PPB US CEO Kip Levin told Online Poker Report that rebranding its New Jersey online casino to FanDuel is “something we’re considering.”

During the group’s Q2 earnings report this week, PPB confirmed that their US online gambling would be conducted under the FanDuel brand. Horse race betting will continue using the TVG brand.

The Betfair NJ online casino is a joint venture in partnership with the Golden Nugget, and between them, they have pulled in a staggering $209 million in NJ online casino revenue since they launched in late 2013.

Those numbers have to look attractive to DraftKings. And DraftKings Sportsbook is keen to hear what New Jersey punters want:

OK, the question is really about NJ sports betting. But the thinking behind the tweet implies that DraftKings is open to serving its new customers with a broader range of gambling opportunities.

Online casino is easier to provide than sports betting

DraftKings rightly received an ovation for its sports betting app launch, which was apparently the result of preparations begun a year before.

The investment has certainly paid off in the amount of press coverage the company has received, but it also demonstrates the capabilities of the DraftKings IT team and its partner Kambi.

Online sports betting is an order of magnitude more difficult to deliver than online casino games. Sports betting demands data integrity and extensive fraud prevention measures. Customer service costs more, IT costs more, and customer retention costs more in marketing expenses.

Online casino is relatively simple by comparison, requiring a bespoke front end and a good relationship with a games supplier such as IGT or NetEnt.

With lower costs come higher profit margins

The other incentive to get into an online casino is that the business provides higher profit margins than sports betting and NJ online poker.

The biggest ongoing cost is marketing. With a head start in the race to acquire NJ online sports betting customers, DraftKings Sportsbook can reduce those costs. How? It can cross-sell an online casino to its existing customers.

By offering an online casino, DraftKings can also help promote their partner, Resorts.

The provision of online gambling in New Jersey has given the operators’ casino partners a boost. Online players have been encouraged to enter live casinos, often for the first time.

Online gaming hits a different demographic that Atlantic City casinos have found hard to target with their own marketing.

Resorts would be more than pleased if DraftKings could introduce a casino experience to more NJ online casino players.

The pressures are going to be too intense to resist. DraftKings may have been silent so far, but its business model, partners, and the market will drive it to launch an online casino product.

The countdown has begun.

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Joss Wood

Though Joss Wood's primary focus is on international regulated online gambling markets, he also follows the legal New Jersey online gambling industry and writes extensively about sports betting. Previously he worked as the editor of Poker Industry Pro, worked in business and finance, and played online poker professionally for seven years.

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