DraftKings and Churchill Downs Inc. formed a new multi-year agreement on Nov. 29. As a result, Maryland sports enthusiasts will be able to take part in pari-mutuel horse betting on the DK Horse app before Triple Crown season.
DraftKings to debut DK Horse app
The pinnacle of thoroughbred horse racing in Maryland takes each May via a week-long celebration that concludes at Baltimore’s Pimlico Race Course with the Preakness Stakes. This second and shortest leg of the Triple Crown determines whether there’ll be a Triple Crown contender for the year.
And fortunately, a new alliance between DraftKings Sportsbook and Churchill Downs promises to put even more giddy-up in the upcoming Triple Crown season. The partnership grants DraftKings access to official horse racing data acquired by Churchill Downs — including Triple Crown events and smaller races like The Kentucky Oaks.
TwinSpires finds new life in DK Horse
As per the agreement, Churchill Downs’s subsidiary, TwinSpires, will provide advance deposit wagering technology to DraftKings. The new wagering platform, called DK Horse, will allow eligible DraftKings customers to bet on horse racing.
This stand-alone platform will be separate from DraftKings Sportsbook and DraftKings casino, with a distinct app and wallet. Ultimately, the company hopes to merge the entities at a later date through a common wallet.
The DK Horse app expects to officially launch in time for the 149th running of The Kentucky Derby in May. DK Horse plans to be on hand in all markets where regulated betting on horse racing is permitted, said DraftKings CEO Jason Robins:
“We are excited to collaborate with Churchill Downs Inc., not only to give our existing customers an opportunity to engage with pari-mutuel horse wagering but also to acquire new customers efficiently during marquee horse racing moments. Due to the structure of the agreement, we expect this new product offering to be immediately profitable.”
Horse betting profitable to sportsbooks
DraftKing investors will likely welcome Robins’ remarks on the DK Horse app being “immediately profitable.” Public markets continue to sour on companies functioning under heavy quarterly losses.
Financial details of the deal were not made public. What’s known, however, is that the deal is a 60-40 revenue share. Churchill Downs Inc. (CDI) will receive 60% of the revenue from wagers taken through DK Horse, while the remaining 40% stays with DraftKings.
Caesars Sportsbook also recently entered the world of horse race betting, launching Caesars Racebook in Maryland on Dec. 4.
Deal allows DraftKings to expand footprint
The partnership is an opportunity for DraftKings to expand its offerings by providing horse race betting to both new and existing customers simultaneously. Another perk to the deal is that it also provides DraftKings entry into states that haven’t legalized online sportsbooks.
TwinSpires is currently operational in 21 states — more than DraftKings’ online sportsbook or its iGaming product. DK Horse aspires to match that footprint so that users in some states have the chance to join the DraftKings system before the base product is allowed.
For Churchill Downs Inc. (CDI), the deal makes it possible to scale up its betting offerings. As previously indicated, TwinSpire will continue as a standalone app but will be accessible as part of the DraftKings network, which according to its last quarterly earnings report, boasts 1.6 million unique paying users.
The alliance between the two publicly-traded companies also serves as a gradual progression for combining traditional sports betting with wagering on horse races. The two analogous endeavors have been largely kept apart in the past due to historical legal precedents and state regulations.
Stock in CDI & DraftKings to improve
Back in September, CDI forged a multi-year deal with FanDuel Sportsbook, DraftKings’ main rival. In accordance with the agreement, CDI granted FanDuel wagering and sponsorship rights to The Kentucky Derby, the first jewel of the Triple Crown. As a result, the two companies plan to band together on initiatives such as sports betting, broadcast rights and advanced deposit wagering (ADW).
DraftKings is far from the only sportsbook with a foot in horse racing. Fox Sports owns 25% of NYRA Bets, with a future opportunity to increase its equity. And Flutter Entertainment, FanDuel’s parent company, acquired TVG in 2009 for an undisclosed amount.
The value of DraftKings’ market cap is at $6.56 billion as of Thursday’s close. In the past 12 months, its stock has fallen 49%. Churchill Downs has a market cap of $8.21 billion, with the stock down 1.4% in the past 12 months.
DraftKings aims to provide the best-in-class odds for horse racing events by making optimal use of the official horse racing data, said Bill Carstanjen, CEO of CDI.
“We believe the depth and quality of our online offering through TwinSpires is unmatched in horse racing. We are excited to establish this relationship with DraftKings and to deliver a full end-to-end white label ADW solution that will introduce their significant base of sports betting customers to horse racing wagering.”