Sports betting company DraftKings Inc DKNG is launching a new offering to attract additional customers and potentially lower customer churn. Here are the details.
What Happened: On Tuesday, DraftKings announced a partnership with Churchill Down Inc CHDN to launch DK Horse, a horse betting platform. The move comes several months after Caesars Entertainment Inc CZR unveiled a similar horse betting platform offering.
The multi-year agreement will see DraftKings offer wagering on horse racing with TwinSpires, a subsidiary of Churchill Down. TwinSpires is the market-leading online horse racing platform in the United States.
DK Horse will launch in 21 states at its initial rollout, which is planned in the coming months according to the company. DK Horse will be a standalone branded app from the venture. Customers will have to sign up and deposit funds separately from the DraftKings Sportsbook, Casino and daily fantasy apps.
The company said the app will be launched ahead of the May 2023 Kentucky Derby, the top American horse racing event annually.
“We are excited to collaborate with Churchill Downs Incorporated, 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,” DraftKings CEO Jason Robins said.
Why It’s Important: The launching of horse-race betting by DraftKings could help the company add new customers to the ecosystem and help cross-selling efforts.
DraftKings gained early market share in the sports betting space thanks to its dominant position in the daily fantasy space and its strong existing customer base.
The partnership links DraftKings with one of the largest horse racing companies and the owner of the iconic Kentucky Derby race. Churchill Downs also announced in July it was exiting the sports betting business. The new partnership with DraftKings could be a win-win between the two companies, capitalizing on their respective strengths.
The company has struggled with profitability, with large spending on customer acquisition and marketing. The new venture could help in achieving higher revenue per user, while lowering customer churn. Robins also shared a key business impact of the venture with Churchill Downs.
“Due to the structure of the agreement, we expect this new product offering to be immediately profitable,” Robins said.
Horse racing has been an area pushed forward by DraftKings competitors including FanDuel and BetMGM, a joint venture between MGM Resorts International MGM and Entain.
DKNG Price Action: DraftKings shares are up 2% to $14.72 on Tuesday. Shares of the sports betting and daily fantasy company are down 46% year-to-date in 2022.
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Photo: Courtesy of Roderick Eime on flickr.
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