DraftKings Links up With Michigan Tribe, Gets Online Betting Access in Eighth State
Posted on: June 4, 2020, 08:41h.
Last updated on: June 4, 2020, 11:42h.
Following a two-day pullback, DraftKings (NASDAQ:DKNG) stock found some support Thursday on news the sportsbook operator won approval for online betting in Michigan.
The company is partnering with Bay Mills Resort & Casino, a tribal gaming venue, to bring the DraftKings mobile app to the Wolverine State. As part of the agreement, the operator will also run a retail sportsbook at the gaming property, which is located in Brimley along the Upper Peninsula.
Last December, Michigan lawmakers approved sports betting and the first retail sportsbook there went live in March. But as was the case in nearby Illinois, the state’s efforts to ramp up sports wagering were hindered by the COVID-19 pandemic.
DraftKings says there’s already evidence suggesting Michigan will be a major online betting market, and that arrival of the popular mobile app could lure casual sports fans, too.
In a DraftKings-led consumer study of Michiganders who expressed interest in online sports betting, over a third had already actively placed a legal bet via mobile by traveling either to another state or internationally where permitted,” said the company. “Another 55 percent had never made an online wager before, demonstrating potential among casual bettors upon market entry.”
If Michiganders were traveling to another state to place sports bets, it was likely Indiana. The Hoosier State borders Michigan to the south and is one of the fastest-growing sports wagering markets in the country.
A Case of Excellent Timing
News that DraftKings is entering Michigan, the tenth-largest state by population, comes about a week after the NHL revealed plans to resume its 2019-20 season and a day after the NBA did the same. Detroit is home to the NHL’s Red Wings and the NBA’s Pistons.
The statement provided by Bay Mills and DraftKings doesn’t indicate when the mobile app or brick-and-mortar sportsbooks will be up and running. Assuming Major League Baseball doesn’t soon start its 2020 campaign, the next marquee sporting event scheduled to take place in the Wolverine State is a NASCAR race on Aug. 9.
Michigan becomes the eighth state in which DraftKings can offer its mobile app, joining Colorado, Indiana, Iowa, New Jersey, New Hampshire, Pennsylvania, and West Virginia. The state is the seventh with a DraftKings-branded retail sportsbook, joining Colorado, Iowa, Mississippi, New Hampshire, New Jersey and New York.
Only recently did Michigan end one of the more controversial stay-at-home orders in the US. But some tribal casinos there have had modest reopenings in recent weeks. Bay Mills Resort & Casino is taking reservations for this weekend, according to its website.
Vital to the Thesis
Adding more states to its roster, particularly via online access, is vital to the DraftKings’ investment thesis – one that’s being widely embraced by smaller investors, but that carries ample risk because the company isn’t yet profitable.
Online sports betting and iGaming, or internet casinos, are higher margin businesses than land-based gaming properties. While investors like the asset-light model that comes with an internet betting business, operators must forge into new states to grow revenue and justify high multiples.