Nearly 40% of those with active daily fantasy sports accounts at DraftKings in New Jersey have made at least one sports bet on the company’s sister site, DraftKings CEO Jason Robins revealed during the second day of the ICE Sports Betting USA conference in Manhattan on Wednesday.
Is that a lot? Moderator Darren Rovell called that “a very big number.”
But Robins said, “Maybe I had too ambitious an expectation, but I thought it would be higher. I figured there would be more overlap.”
Robins added that sports betting — legal so far in only eight states — already represents almost 20% of the company’s business. And in New Jersey, sports betting comprises 80% of its overall business.
Are those figures high or low? Again, it’s a matter of perspective.
One of the recurring themes of the two-day event that attracted a few hundred of gambling industry officials — many of them from sports betting-loving Europe — was that since the U.S. Supreme Court’s landmark sports betting ruling in May, everything has been a matter of perspective. Another was that making assumptions about results is foolhardy.
A “sticky” sports betting point
Robins described another early twist he didn’t see coming.
“I am learning that people’s habits are ‘sticky’ — it’s taking a little more time to convert people from the black market than one might have thought,” Robins said.
But Robins has come to be content with whatever his customers ultimately decide.
“I personally prefer fantasy sports, but it’s really no different than having different games at casinos,” Robins said. “There is a segment that prefers one over another, and there is a segment that prefers both.”
Rovell noted that as a New Jersey resident, he can sign up for as many as eight sports betting apps, adding that a minority of sports bettors likely take a “collect ’em all” approach.
“Those tend to be the ‘sharper’ bettor — not the ones you want as much,” Robins said. “The more casual player tends to stick to a brand.”
Once a user has made the decision to try the DraftKings brand, on a desktop computer that gambler can seamlessly toggle between DFS and sports betting, and the “wallets” — the player’s online bankroll — are linked.
Robins noted, however, that a bettor on a mobile phone needs to download two apps to play both sorts of “sports risking.”
That did not necessarily need to be the case, he explained. Robins said the more restrictive regulations on sports betting made it impractical to merge the game play into one app. For instance, you are automatically logged off from a legal sports betting site after just 15 minutes of inactivity and thus have to have your geolocation re-checked. That would have been too much of a nuisance for DFS-only players, company officials concluded.
Rovell’s final question for Robins sought a bottom-line reveal. “Is DraftKings profitable?” Rovell asked. “No,” Robins replied.
Harness racing in “severe decline”
Robins wasn’t the only operator in the spotlight on Wednesday. Meadowlands Racetrack operator Jeff Gural got some jaws in the audience to drop as he — the operator of the most renowned standardbred racing track of the last 40-plus years — described the state of the industry.
“Harness racing is in severe decline,” Gural said. “If anyone wants to be honest about it, the only reason horse racing exists these days is because it is subsidized by casino gambling. So it’s very hard to operate a racetrack in New Jersey year-round with no subsidy.
“But the Supreme Court really saved me, like a convicted murderer who got a stay of execution. We were drowning in red ink at the Meadowlands, but at least now we have a fighting chance.”
Still, Gural said he at first had higher hopes for a boost for his track from the FanDuel Sportsbook at the Meadowlands than he does now.
“When we first opened [sports betting], we saw our racing revenues increase,” Gural said. “Tellers said to me they were seeing people come out of the sportsbook and then go over and place a bet on a race.
“Now it’s the opposite. The reason is that when we first opened, there was no online [sports betting] component. So to bet you came to the Meadowlands — you had to be in the building. What we are seeing now is our handle is declining.”
Gural credited Monmouth Park operator Dennis Drazin for sticking out the sports betting saga, saying, “If not for Dennis, we would not be sitting here.”
While the state’s thoroughbred horsemen were formal intervenors in the long-running case while the harness racing side sat out, Gural revealed that he footed much of the bill for legal fees.
“I paid half, but I give him all the credit,” Gural said. “Truthfully, I thought he was crazy. I’d say, ‘What are you doing appealing again to the Supreme Court? This is costing me a fortune in legal fees.'”
The problem with early retirement
Gural was just warming up as he reverted to a long-running lament of seeing superstar horses across the breeds sent out to stud about as soon as they make a name for themselves.
“We have a business model that is destined to fail,” Gural said. “We take the stars out of the game, make them retire as soon as possible. In our business, we would have told Tiger Woods to retire 20 years ago.
“We’re basically saying to the customer, ‘Screw you, we’re not going to give you what you want to watch, we’re going to give you what we want you to watch, because we’re so greedy. I don’t see that racing has a longterm future.”
Gural said that “fixed-odds” betting — allowing a big bettor to lock in a preferred price a day or two in advance while not impacting the pari-mutuel odds by the mere weight of his or her wager — is legal in New Jersey but has not caught on as it has in the United Kingdom.
“It hasn’t caught on here at all — a total flop,” declared Gural.
Gural owns Tioga Downs, one of the four new upstate New York casinos that, almost five years ago, were granted permission to offer sports betting if and when the federal sports betting ban was ever lifted.
But six months later, New York regulators have yet to issue the needed guidelines to allow those casinos to open sportsbooks.
“There is a lot of politics behind the delay,” said Gural, a prominent Manhattan real estate developer who was involved in helping craft the legislation that permitted the new commercial casinos to feature an added gambling amenity.
Gural speculated that Governor Andrew Cuomo, who faced a primary challenge before the general election earlier this month, did not want to take on potential controversy over sports betting. Gural said he hoped that the state legislature would address the issues — including whether to join New Jersey in offering online sports betting.
MGM and “integrity”
Wednesday’s ICE conference proceedings also featured MGM CEO Jim Murren, whose company added a partnership with MLB this week to their previous deals with the NBA and NHL. Murren said that their deals are for proprietary data — not for what MLB and NBA initially sought.
“Right from the start, we said, ‘Look, we’re not interested in paying an integrity fee,'” Murren said. “We’re actually offended by that concept. It’s disturbing to us, because our whole business model is based on integrity. We don’t feel like paying a fee to do what we do every day.
“But we are willing to pay — and pay well — for data, and for sponsorships, and for co-branding.”
A key, if subtle, point by Murren was that he said that accessing real-time data was crucial to offering in-game betting, which accounts for about 70% of the gambling in the UK and which already is growing rapidly in the U.S.
Murren also stressed sports betting is just another brick in a wall of their 31 million registered customers, only perhaps 10 million of whom, Murren estimates, will get involved in sports betting. And he said that MGM, a major casino operator, has not opposed AirBnB or internet gaming because he believes that a robust marketplace for the public ultimately redounds to his company’s benefit.
As for sports betting, “We’re only as good as our weakest competitor, in terms of reputation,” he said.
So where does the NFL fit in? Murren said that the NFL was “not as enlightened” as the other leagues on sports betting, adding that MGM does not support the NFL’s goal of federal oversight.
But Murren, whose company signed a recent limited deal with the New York Jets, said he may soon have “four or five” other agreements with NFL franchises — and that may leave the league eventually following suit.