On Monday afternon, Caesars Entertainment Corp. announced a partnership with DraftKings in a deal that will give the Las Vegas-based company an undisclosed equity stake in the daily fantasy sports and sportsbook operators. In exchange, DraftKings will benefit from an easier path to receiving gaming licenses in the future as more states legalize sports betting.
In most states, online sports betting providers need a partnership with an already existing land-based operator in order to receive a license. With Caesars having 37 properties in 14 states, the process for DraftKings to access several U.S. markets becomes substantially easier.
According to Bloomberg, Caesars will ‘get a cut of DraftKings’ gambling revenue in states where the partnership is in full effect.’ DraftKings already has an existing partnership with Resorts Casino in New Jersey, where the DraftKings online sportsbook and casino is already operational.
“Caesars’ agreement with DraftKings, their first multi-state partnership, brings together the established leaders in gaming, daily fantasy sports and sports betting to provide customers more options,” said Caesars CEO Mark Frissora in a press release. “This alliance is the latest initiative by Caesars to capitalize on our database, generate a new revenue stream in a growth market and raise our profile in sports, in part by creating new sports-themed guest experiences across the country.”
This is the second major partnership formed by Caesars Entertainment in as many months. In January, Caesars announced a partnership with the National Football League, which allowed Caesars to use NFL-trademarked materials to promote their casinos in the U.S. and the U.K. The company has also partnered with seven of the league’s franchises.
DraftKings originally launched in 2012 as a daily fantasy sports operator. They quickly transitioned towards a more traditional gaming model after the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act last year.
In New Jersey, DraftKings has their own daily fantasy sports operation, a sportsbook, and a casino that features games such as blackjack and roulette. Their New Jersey online sportsbook is regularly the leader in the market, and the casino launched last month was the driving force of the $33 million in January revenue from online gambling in the area.
Since most states require a land-based casino partner, DraftKings can easily expand these operations into other states as legislation passes throughout the country. In states where only one brand is permitted, Caesars will prioritize its own products and will continue to compete alongside DraftKings.
The partnership comes on the heels of the report that billionaire Carl Icahn has a 10 percent stake in the company and is pushing for a sale of its assets to a competitor.
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