Sports Betting Is Next Battleground In DraftKings vs. FanDuel Saga

Following the PASPA decision, FanDuel has taken the early lead in the next chapter of its rivalry with DraftKings: the sports betting battle.
DraftKings-FanDuel-Battleground
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For the last six years, there have been only two titans of the industry in the daily fantasy sports (DFS) world. Others have come and gone, some were acquired, and a few have endured by carving out a niche. But the story of daily fantasy sports no doubt belongs to DraftKings and FanDuel.

Now, with PASPA overturned, a new narrative is emerging in the DraftKings vs. FanDuel saga: the battle for sports betting supremacy.

The history of DraftKings vs. FanDuel

The two companies started off like siblings, with the younger DraftKings (founded in 2012) casually observing its older brother FanDuel (founded in 2009) in order to find its footing. Not long after, though, it was all-out war. The companies went toe-to-toe raising money, each trying to outdo the other with the next round of funding.

Then there were the media and TV ad wars, which saw the two DFS giants saturate the market with what seemed like unlimited advertising budgets. It was almost too much, too fast, and at the time, it was clear FanDuel and DraftKings — along with their respective CEOs Nigel Eccles and Jason Robins — didn’t really like each other. Even the locations of the companies — FanDuel in New York and DraftKings in Boston — underscored the rivalry.

But one Sunday in September 2015, everything changed. A DFS scandal erupted when a DraftKings employee, who had access to data the general public didn’t have, won $350,000 on FanDuel. Both brands came under intense and immediate scrutiny, which was soon followed by questions about the legality and legitimacy of DFS. The negative publicity, coupled with the constant need to lobby for legislation that would make DFS unequivocally legal, resulted in DraftKings and FanDuel agreeing to the unthinkable: a merger.

In the end, several states started passing bills that formally legalized and regulated DFS, and the merger between enemies turned allies never happened. By the end of the entire ordeal, one thing had become obvious: DraftKings had closed any gap that previously existed, in terms of valuation or brand recognition, with big brother FanDuel.

And on May 14, 2018, the DFS landscape once again shifted.

FanDuel makes first sports betting splash

In the aftermath of the Supreme Court’s decision to leave the option to regulate sports betting up to each individual state, FanDuel has taken the early lead in the next chapter of its battle with DraftKings. With FanDuel selling to Paddy Power Betfair — one of the world’s largest gambling brands — it’s hard to imagine a way DraftKings can keep pace with them, at least in the sports betting space. For now, daily fantasy sports as we’ve known it soldiers on, but as I’ve written before, DFS-sports betting hybrid products may be the way of the future.

FanDuel was back in the news a few weeks later when soon-to-be parent company Paddy Power Betfair announced agreements with Meadowlands Racetrack (New Jersey) and Tioga Downs (New York). The most significant details to come from that announcement are that the offerings in Meadowlands and Tioga will be FanDuel branded sportsbooks. This was followed more recently with news that the operator will offer its sports betting services to Greenbrier in West Virginia.

If I’m running DraftKings, I’m slightly concerned about the prime real estate my longtime rival is snapping up.

Finally, on an admittedly smaller but still relevant scale, FanDuel slightly outperformed DraftKings during the first month of Pennsylvania’s newly regulated fantasy sports industry. According to the Pennsylvania Gaming Control Board’s report for May, FanDuel earned $673,014 while DraftKings took in $632,009.

DraftKings prepares for battle

If anybody thinks DraftKings is just going to lie down and let FanDuel have all the sports betting fun, they’re wrong. In fact, it’s technically DraftKings that made the first move in the space, though the impact of hiring a Head of Sportsbook back in February 2018 is still up for debate.

For me, the biggest indication that DraftKings is preparing to go head-to-head with FanDuel on the sports betting battleground is its apparent disinterest in a sale to the Kindred Group, which would put it back on equal footing with FanDuel. Instead, DraftKings recently announced a partnership with Kambi Group, who will provide DraftKings the support and platform to enter the sports betting market in New Jersey. Kambi supplies the Kindred Group with these same services and platform.

I have one final point on DraftKings and sports betting, which was prompted by this tweet:

If this is true, and you couple it with the rest of the ways DraftKings is preparing to enter the sports betting world, it doesn’t sound like DraftKings wants to be the 20th, or even the 10th, best online sports betting operator. They want to be the best, and given FanDuel’s current position, it seems the two companies are headed back to familiar territory: all-out war.

Which company will have more sports betting success?

Right now, it’s difficult not to give FanDuel the edge. I’ve heard industry experts say they expect DraftKings, without the power of a Betfair on their side, to be miles behind the best international sportsbooks. I won’t dispute that possibility.

But it’s also possible that through their partnership with Kambi, DraftKings ends up in the conversation for top dog in sports betting. In my opinion as a DFS player, DraftKings still has to iron out the kinks in their customer experience, because that’s an area where I’m positive international sportsbooks have them beat by a significant margin.

At this point, those are just guesses. But if the saga of DraftKings vs. FanDuel evolves into another epic battle for market share, they will both achieve sports betting success. And that’s no guess.

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