It appears the DraftKings is on the verge of a major acquisition. Reports have surfaced that DraftKings is close to agreeing on a deal to acquire SBTech. Although no significant details or timeline on the deal have been confirmed yet, it is expected the deal could be worth somewhere in the $400 million range.
The importance of this deal would be significant for DraftKings. This would give them their own platform provider as they begin to sweep across the country as more and more states legalize sports betting.
Currently partnered up with Kambi for its New Jersey operations, the acquisition of SBTech would allow DraftKings to operate without Kambi as they enter more states. DraftKings would be able to provide sports betting and online casino gaming all in one place.
A Way Into Pennsylvania
Nine states now have legal sports betting launched. DraftKings will be looking to enter states like Pennsylvania, Iowa, Illinois, and Tennessee in the near future. It has been reported that DraftKings is already in the process of launching in West Virginia. They are currently having trouble getting into Pennsylvania, expected to be one of the biggest markets in the country. DraftKings recently partnered up with Caesars, but the deal did not grant DraftKings access to the huge Pennsylvania market.
SBTech is partnered up with Presque Isle Downs Casino in Pennsylvania, and this deal could be DraftKings’ way into The Keystone State. DraftKings recently submitted its application for two gambling licenses in Pennsylvania: One as a sports betting operator and one as an interactive gaming operator. These licenses would allow DraftKings to partner with a casino to offer both online sports betting and gambling.
However, Presque Isle Downs has already submitted plans to the Pennsylvania Gaming Control Board to have BetAmerica operate its online sportsbook. If the DraftKings/SBTech deal were to happen, and Presque Isle and DraftKings were to team up, they would have to resubmit their plans to the PGCB, delaying their launch and more than likely missing out on the start of the 2019 NFL season. DraftKings has limited option remaining in Pennsylvania outside of Presque Isle.
SBTech has over 50 partnerships across the world, including Churchill Downs and Golden Nugget Casinos in the United States. With a possible acquisition of SBTech, DraftKings would be getting a wide range of partnerships across the globe.
The Oregon Lottery has plans to launch sports betting by the start of the upcoming NFL season. SBTech will be the ones running those operations in Oregon, exclusively. If DraftKings were to obtain SBTech, that would essentially hand them the Oregon sports betting monopoly. The Oregon Lottery is estimating over $140 million in revenue from sports betting in its first three years.
If the deal does eventually manifest, Kambi Group will stand to lose the most. Kambi’s shares reportedly dropped 20 percent when news broke of a potential DraftKings/SBTech deal. If the deal does go through, Kambi could lose its biggest US partner.