DraftKings has struck a multi-year agreement with Churchill Downs Incorporated (CDI) to bring pari-mutuel horse race betting to its US customers.
The deal will see DraftKings launch a standalone horse racing app (DK HORSE) in the coming months, powered in part by technology from Churchill Downs subsidiary TwinSpires.
DraftKings customers will not be able to sign up to DK HORSE and deposit using their existing accounts as one-wallet functionality has not yet been integrated with the US operator’s sportsbook, casino and DFS apps.DK HORSE is expected to initially launch in 21 states pending licensing and regulatory approvals ahead of the 149th running of the Kentucky Derby in May 2023.
Financial details of the deal were not disclosed, although it is expected to operate on a rev-share basis, with CDI taking a percentage of bets on the DK HORSE app.
“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,” said DraftKings CEO Jason Robins.
“Due to the structure of the agreement, we expect this new product offering to be immediately profitable,” he added in a bid to reassure investors concerned over the operator’s long-term profitability timeline.
DraftKings CEO Jason Robins: “Due to the structure of the agreement, we expect this new product offering to be immediately profitable.”
TwinSpires will provide DraftKings with pari-mutuel wagering rights to horse racing content owned or controlled by CDI, including the Kentucky Oaks and Kentucky Derby.
It will also supply DK HORSE with its advance deposit wagering (ADW) technology.
“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,” he added.
In February 2022, TwinSpires was one of the first US operators to pull out of the online sports betting and casino market after deciding it was simply too expensive to compete.
The deal with DraftKings will allow it to scale and generate revenue from online wagering, only without the substantial losses associated with additional marketing and expansion costs.