DraftKings has launched its real-money parimutuel horse racing platform in multiple states as the industry looks to grow its digital presence.
DK Horse, DraftKings’ digital horse race wagering platform, is now live in 12 states, the company announced Wednesday. DraftKings expects additional state launches ahead of the May 6 running of the Kentucky Derby, the nation’s best-known horse race.
The new platform comes from DraftKings’ partnership with Churchill Downs, the eponymous company that owns the track that hosts the Kentucky Derby, and its digital horse racing offering, TwinSpires. Churchill Downs added real money single-game sports wagering to its platform in 2019 but shuttered its digital sports gambling operations in 2022.
TwinSpires will provide its advance deposit wagering tech in conjunction with DraftKings to operate DK Horse, per a joint announcement from the two companies. The November 2022 press release announcing the deal indicated DraftKings hopes to have as many as 21 states eligible to take real-money wagers before the 2023 Kentucky Derby.
“Together with Churchill Downs Incorporated, an industry leader with a deep-rooted history in horse racing, we will deliver an innovative, mobile customer experience,” said DraftKings CEO Jason Robins in a statement Wednesday. “Our goal is to provide our customers with best-in-class-sports and gaming products, and we expect DK Horse to provide a fun and new way to engage with renowned races like the upcoming Run for the Roses.”
DK Horse details
DK Horse customers will be able to wager on a wide range of the nation’s best-known races, including Churchill Downs’ Kentucky Derby as well as the Kentucky Oaks, according to a release. DK Horse will also give customers the ability to handicap races, bet and stream video of races within their DK Horse account. Bettors could wager on races at dozens of tracks across the country as of Wedensday.
The new standalone app is separate from DraftKings’ existing sportsbook, iCasino and daily fantasy sports platform. This will require bettors to download a separate app and fund it independently of the other product.
DraftKings' new DK Horse wagering platform:
– Requires downloading separate app
– Unlike sportsbook, eligibility depends on state of residence, NOT physical location, per $DKNG website
– Available to residents of the following:
— Ryan Butler (@ButlerBets) March 29, 2023
Wagering eligibility will also depend on a bettor’s state of residence, not the state they are physically located in, according to the DK Horse website. Though digital sportsbooks determine betting eligibility by where a bettor is located at the time the bet is placed (among other criteria), DK Horse will require residence in one of the eligible states.
This requirement stems from federal and state law and the regulatory distinctions placed between wagers on horse races and those on sports such as football or basketball.
DK horse is available to eligible residents of Colorado, Florida, Indiana, Kentucky, Massachusetts, Minnesota, Montana, Oregon, Virginia, Washington, West Virginia and Wyoming.
US horse racing environment
The new parimutuel racing platform comes as the nation’s horse racing industry looks to turn around – or at least limit – major declines in the past decades.
Since an all-time record high of $15.1bn in handle in 2003, American parimutuel horseracing has steadily declined in handle (and national prominence). The industry reported just over $12.1bn in handle in 2022; regulated US sportsbooks reported nearly $100bn in handle during that same time.
Racing officials and lawmakers have pursued federal legislation as well as new betting options such as fixed-odds wagering in recent years as a way to keep the industry afloat. Major gaming operators such as Caesars have also extended their digital horse-racing presences in efforts to attract new bettors.
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 believe the depth and quality of our online offering through TwinSpires is unmatched in horse racing,” said CDI CEO Bill Carstanjen.
“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.