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DraftKings Scraps DFS in Oregon in Favour of Sports Betting
By Jeff Osienya Aug 01, 2021 IndustryDraftKings pulls the plug on DFS in Oregon as it continues to court the state Lottery for taking over the tech operations of the monopolized Scoreboard sports betting app. The Oregon Lottery plans to switch platform providers from SBTech to DraftKings.Out of the blue, DraftKings has moved to axe its paid Daily Fantasy Sports contest offering in Oregon following its ongoing bid to take charge of the state’s sports betting vertical. In an announcement email sent to customers last week, the Nasdaq-listed DFS and sports betting giant disclosed that it would stop powering DFS in the Beaver State.
Currently, DFS isn’t exactly legal in Oregon, but DFS operators serve the market as the activity falls in a grey area of state law. So, while no law explicitly allows it, DFS hasn’t particularly been defined as an illegal activity. Consequently, because of the chance that offering DFS could be considered illegal, the Boston-based DFS juggernaut decided to call it quits.
But then, the actual reason as to why DraftKings has exited the Oregon DFS market is because it wants to butter up to the state’s regulator and win over the Orogen Lottery. Given that DraftKings is the likely candidate to take over the Scoreboard app, Oregon’s Lottery-operated sports betting platform, it is best that the brand stays clear of any contentious activities. That way, it may be easier for the state’s decision-makers to warm up to DraftKings and hand the company the Scoreboard platform to run.
DraftKings Still Stands by the Legitimacy of DFS in Oregon
Interestingly, even though DraftKings has gone above and beyond to try and clean up its act, the company maintains that DFS is rightfully taking place in the Beaver State. Part of the statement that DraftKings sent to its DFS patrons in Oregon announcing its exit read:
Quote“As you might already be aware, DraftKings has been in discussions with the Oregon Lottery to potentially transition its Scoreboard app to the DraftKings platform. During these discussions, some questions have been raised about whether paid fantasy sports contests are permissible under Oregon law. While we respectfully disagree, we value our relationship with the Oregon lottery and share a common commitment to best serve Oregonians who are passionate about sports betting. As such, DraftKings will stop paid fantasy sports contests in Oregon at 7am PST on July 26, 2021, so that those discussions can continue.”
For a few months now, the Oregon Lottery and DraftKings have been having talks about the Scoreboard takeover. As we speak, the Beaver State’s Scoreboard sportsbook app is powered by SBTech, and it has been so since the monopolized Lottery-run sports betting went live in 2019. But then SBTech has had a murky history with the Oregon Lottery because of allegations of having operations in countries where gambling is illegal. As such, the Beaver State’s Lottery has been looking to sever ties with the ‘tainted’ partner.
It’s worth pointing out that when DraftKings went public in April 2020 by merging with a special purpose acquisition company (SPAC), the deal was actually a three-way merger. Apart from the SPAC, DraftKings also combined its business with SBTech, the technology company behind its sportsbook platform. After the trinity become one, SBTech’s black-market allegations resurfaced, but the larger DraftKing’s brand but the claims were brushed off. Merger or not, Oregon Lottery officials are pushing hard to break off from an SBTech association.
The plan of switching from SBTech to DraftKings was first disclosed in February by Barry Pack, the Oregon Lottery Director. Back then, he said that:
Quote“We are in initial discussions with them about a new contract to transition Scoreboard off the SBTech platform and onto the DraftKings platform, as well as any other potential products and services. It is likely I will be coming to you in the March meeting for approval of a major procurement for this purpose.”
However, since then, there hasn’t been any official authorization to close the deal, although, with DraftKing’s latest move, the approval seems to be just around the corner.
FanDuel Happy to Fill DraftKings’ DFS Gap in Oregon
FanDuel, the biggest competitor to DraftKings in both DFS and sports betting, welcomed the news and reassured customers that it would continue serving the Oregon market. Now that DraftKings is out of the equation, FanDuel will singlehandedly command the entire industry, enjoying virtually all the $335 million annual revenue in the Beaver State’s DFS industry.
Nonetheless, should DraftKings’ effort to appease Oregon’s regulators bear fruit, the company’s bet on sports betting, the DFS exit shall be a worthwhile sacrifice. So, while DraftKings’ DFS customers may be upset, the company is playing hardball.
This isn’t the first time that DFS operators, DraftKings and FanDuel in particular, have had to make last-minute adjustments to adapt to changing market conditions. Last month, the two DFS leviathans had to move swiftly in Connecticut to avoid being kicked out of the market. They had to strike deals with tribal casinos in the state at the 11th hour to keep their operations intact, whereas their counterparts such as MonkeyKinfeFight and PrizePicks ended up closing shop in the state.
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