Although California sports betting has yet to be legalized, the reality is that it’s inevitable. Whether that also means “imminent” is a separate matter. Regardless, DraftKings is attempting to cement its place in the market well before any legalization.
Back in March 2023, DraftKings Sportsbook launched DK Horse, a sports betting app dedicated solely to horse racing. At the time, this was considered strictly a situational additive rather than prime feature. DraftKings was looking to more closely resonate with everyone betting on the Kentucky Derby.
Since then, though, DK Horse has become more of a mainstay among online sportsbooks and betting apps in the United States. It isn’t necessarily a core part of the company’s business, but it has turned out to be a larger than expected slice of the pie.
And to that end, DK Horse recently launched in California, just ahead of betting on the Breeders Cup. A little over a month later, it isn’t known how successful the app was among gamblers in The Golden State. As multiple polls have shown, plenty of voters are looking to scratch their sports betting itch. That’s good news for horse racing tracks and horse racing betting apps. Horse racing is exempt from the state’s current gaming laws that prohibit California sports betting.
However, Californians in most parts of the state are generally more interested in betting on the NFL, NBA, MLB, NHL, college basketball and NCAA football. Many throughout the industry, in fact, wondered whether DK Horse would generate enough business.
But as it turns out, building up the DK Horse betting app in California is a secondary concern of DraftKings Sportsbook—if it’s even a concern at all. The company instead views the horse betting app’s launch as part of a much larger, bigger-picture play.
The Real Goal of DK Horse is to Draw More Customers to DraftKings Sportsbook Once California Sports Betting Gets Legalized
In addition to servicing California horse betting enthusiasts, DraftKings is also hoping DK Horse can help their brand recognition for general sports gambling. Granted, that’s not necessarily the company line.
Speaking with Legal Sports Report’s James Gazzale this past summer ahead of wider-spread DK Horse launches, the director of race and sportsbook operations, Johnny Avello, this was not the point of the app. “That is not the way we are looking at it,” he explained at the time. “We see it as getting into a state where horse racing is popular so we can offer our product. The game plan is to be in states where people are horseplayers and want to be betting horse racing.”
More recently, though, Avello sang a slightly, if indirectly, different tune. “It is a big deal for us to start to acquire some California customers,” he told Gazzale ahead of the California DK Horse betting app launch. “We will keep expanding as we can.”
“Keep expanding” no doubt refers to general sports betting in California. The Golden State is considered the largest sports betting market in the United States. DraftKings naturally wants to be in a position to gain as many customers as possible if and when California changes their gaming laws.
Will DK Horse’s Launch in California Actually Help DraftKings Preemptively Acquire a Large Share of the State’s Sports Betting Market?
The question, of course, is whether DraftKings Sportsbook in California will benefit using this logic. And the answer is not as straightforward as it seems.
Acquiring more brand awareness is never a bad thing. So, at the bare minimum, the DraftKings horse racing betting app will not hurt the company’s hold over potential sports gambling customers.
But at the same time, DraftKings is already one of the two most popular sportsbooks in the United States, counting FanDuel Sportsbook as its only peer. Indeed, other sportsbooks have struggled mightily to establish enough of a market share in places both DraftKings and FanDuel operate. They are that ubiquitous. Both would always heavily factor into the legalization of California sports betting even if neither had a horse racing betting app or Daily Fantasy sports betting app up and running in the region.
This is not to say DraftKings’ logic is faulty. They are gaining access to customers that other sportsbooks can’t legally touch. Plenty of DK Horse users will just ride with DraftKings Sportsbook once California legalizes sports betting. Familiarity and convenience will make it so.
Now, will DraftKings’ success be materially different from FanDuel and other United States online sportsbooks because they gained early entry? That’s something only time and the actual legalization of sports betting can tell.
So, What’s the Status of California Sports Betting?
All of this brand recognition means only so much when sports betting in California remains illegal. And it doesn’t appear on the verge of changing anytime soon.
Two California sports betting bills were decidedly shot down by voters during the 2022 general elections. Public sentiment will need to significantly shift before the 2024 general elections if next time’s going to be different.
This, mind you, assumes a California sports betting initiative is even on the 2024 ballot. As of early December 2023, neither the state’s tribes nor a faction of online sportsbooks has proposed a new bill.
Another group has filed a series of different California sports gambling bills for 2024. But they don’t currently have much traction. The authors reportedly did not consult the tribes before filing. And given the level of influence tribes continue to have over the California sports betting discussions, it’s unlikely any of them pass.
This doesn’t necessarily mean sports gambling hopes are dead for 2024. But if another 2024 California sports betting bill isn’t proposed soon, it won’t make it onto the November ballot. And in that scenario, the earliest sports betting could be legalized is 2026.
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