As a new NFL season approaches, daily fantasy sports (DFS) company DraftKings is gearing up for what CEO Jason Robins calls “our holiday season.” A new football season means new user sign-ups, old user re-activations, and the biggest contest prizes DraftKings offers. The company just announced a new DFS product, Flash Draft, that lets users draft a new roster in the middle of an NFL game.
But DraftKings is also eyeing a time in the near future when it will be more of a legal betting company than a fantasy sports company.
“It’s probably some time in the next 2-3 years, would be my guess,” says Robins. “It all depends how quickly the states roll out. That’s really the variable… After you see 10-12 of them doing it, at that point you’ll start to see the lines cross.”
After the U.S. Supreme Court in May struck down PASPA, the 1992 federal act that banned states from allowing sports betting, three states moved swiftly to legalize sports betting: Delaware, New Jersey, and Mississippi. Add those to Nevada and that’s four states with legal sports betting.
Other states are expected to follow in a domino effect—but not all of them.
As Robins cautions, “Right now it’s still a very small portion of the U.S. population, so it’s still all about fantasy.” He says DraftKings is seeing a “halo effect” in new fantasy sign-ups that he believes is stoked by the general excitement around sports betting. Even in states that have not legalized sports betting, new people are trying out DraftKings as a consolation prize while they await betting.
In New Jersey, DraftKings was first to market with a legal sports betting app, DraftKings Sportsbook. MGM quickly launched its own betting app, PlayMGM, becoming the second legal betting app in New Jersey. MGM also grabbed headlines earlier this month by becoming the first official casino partner of the NBA.
As brick-and-mortar casino chains jump in, DraftKings and its competitor FanDuel (now owned by PaddyPower) find themselves in an awkward in-between phase: DFS is their bigger business by revenue, but not for much longer.
“The handcuffs have been taken off, at least in New Jersey or anywhere else that legalizes it,” Robins says. “Now we can pretty much do almost anything. Forgetting even the traditional sportsbook stuff, I’m most excited about the types of new products, things that people play in their offices, Super Bowl squares, March Madness brackets, there’s all kinds of stuff that previously had to happen underground.”
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Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite. Sportsbook is our sports business video and podcast series.
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