While Illinois became the latest state to legalize sports betting last week, the legislation heavily favored traditional retail casinos and shunned online operators. Casino operators are able to begin accepting bets almost immediately whereas all other entrants—such as DraftKings and FanDuel—will have to wait until late 2020 or early 2021 to begin operations.
As another limit to online sports betting, the Illinois legislation will only permit three licenses for online-only sports betting operators, though mobile betting is projected to capture at least 75 percent of the betting market. According to Chris Grove, managing director of sports and emerging verticals at Eilers & Krejcik Gaming, more states are likely to follow in the footsteps of Illinois in preventing DraftKings and FanDuel from quickly entering the market.
“In some states there’s not going to be anything they can do. In many states what you have is a situation where many stakeholders have paid sometimes tens if not hundreds of millions of dollars up front, and then paid taxes to the tune of tens or hundreds or millions of dollars or more, with the implicit tradeoff to local government that they will be able to maintain a monopoly on regulated gambling,” Grove said at Horizon Summit at Levi’s Stadium on Thursday.
Estimates by Eilers & Krejcik Gaming show that DraftKings and FanDuel accounted for 79 percent of New Jersey’s mobile betting market in April. In addition to having a compatible existing user base through their daily fantasy platforms, DraftKings and FanDuel have had a major sports betting advantage over traditional casinos in New Jersey due to marketing and brand identity according to Grove.
“Caesars and Borgata did not necessarily appreciate that there was a distinction for a lot of consumers between a casino gambling brand and a sports betting brand. That’s really why I think DraftKings and FanDuel have been able to maintain that early lead,” Grove said.
Traditional casino operators in Illinois will not have to compete with online sportsbooks for the better part of two years. The Illinois legislation may have already had a ripple effect on the outlook of sports betting legislation—with mobile sports betting in New York having hit a major roadblock and looking unlikely to happen anytime soon.
Boom Fantasy CEO Steve Murphy, who joined Grove on a panel at Horizon Summit, warns that retail casinos will have to invest in technology if they ever wish to compete with DraftKings or FanDuel in a legalized online betting space.
“Placing a mobile bet in New Jersey or Nevada is one of the worst mobile experiences you’ll ever have. The apps barely work, you need to go from mobile app to mobile web, you have to turn geolocation on,” Murphy explained. “Some of these companies have really not mastered the skill to build digital products—DraftKings and FanDuel are well ahead of them and have been able to distinguish themselves. On the flip side, brands like MGM and Caesars have not yet.”
This content is part of our coverage of the San Francisco 49ers and SportTechie Horizon Summit. SportTechie organizes regular events that bring together innovators, investors, and key decision makers from across the world of sports technology. Find out more about future events here.