Rovell: DraftKings Makes Significant Move, Partners with Caesars

Hoping to simplify getting licensed as more states look to legalize sports betting, DraftKings announced a significant agreement on Monday with Caesars Entertainment.

The deal will enable DraftKings to serve as the online and mobile operator in states where Caesars has a brick-and-mortar gambling establishment. In exchange, Caesars gets undisclosed equity in DraftKings.

In each state, online and app operators have had to tie themselves to a land-based gambling operator. So, in New Jersey, DraftKings is partnered with Resorts Atlantic City.

DraftKings' speed to market, as the first sports betting mobile operator, proved to be a boon for the company, which has maintained its market leadership position in New Jersey as 12 other competitors have come online within the state over the last six months.

Approximately 80% of January bets in Jersey were made on a mobile device.

DraftKings not only has mobile for Resorts, but has its name on the sportsbook in Atlantic City. The company also has a land-based deal at the Scarlet Pearl Casino Resort in D'Iberville, Miss., but Mississippi only allows mobile betting within the casino property.

This deal with Caesars will not impact DraftKings' aforementioned relationships; it's just for all new deals.

Eight states currently have sports betting — Nevada, New Jersey, Delaware, Rhode Island, Mississippi, Pennsylvania, New Mexico and West Virginia. Three of those states, Nevada, New Jersey and Mississippi, currently have online and mobile betting.

It's unclear if this means DraftKings will immediately take over Caesars' existing mobile sports betting operations in Nevada.

The upcoming mobile markets that DraftKings will get access to with the Caesars deal will include Pennsylvania, which is speculated to bring on online and mobile betting in the fall.

Caesars also has land-based casinos in Maryland, Illinois and Indiana, which are far along in the legalization process. Further down the road in the legalization landscape, Caesars locations will mean that DraftKings access to Iowa and Louisiana, as well.