DraftKings to Launch Online Racebook in Time for the Kentucky Derby
DraftKings has announced plans to launch an online racebook app called DK Horse in time for next year’s Kentucky Derby. The operator will follow in the footsteps of rivals FanDuel, BetMGM and Caesars, who have all expanded into horse racing over the past year. DraftKings has tied up a deal with Churchill Downs Inc. (CDI), the company that runs the Kentucky Derby, to use its technology and pari-mutuel betting rights. DK Horse will go live in 21 states ahead of the Kentucky Derby in May next year.
CDI launched TwinSpires, a pari-mutuel horse racing betting site named after the iconic spires at Churchill Downs Racetrack in Kentucky, in 2007. It is now one of the top two online racebooks in the country, along with TVG – a brand owned by industry giant Flutter Entertainment, which also owns FanDuel, PokerStars and FOX Bet. CDI made a brief foray into the online sports betting and casino gaming industry in recent years, launching TwinSpires Sportsbook and TwinSpires Casino, but the company has now wound down those operations to focus solely on horse racing.
Earlier this year, CDI announced a multi-year deal to supply FanDuel with racing content, television rights and certain technology services for its racebook. However, the deal with DraftKings appears to be wider ranging, as it will supply the company with the advance deposit wagering technology and pari-mutuel betting rights to CDI’s content, such as the Kentucky Derby and the Kentucky Oaks.
Expected to be Immediately Profitable
DraftKings started out as a Daily Fantasy Sports operator before expanding into online sports wagering after PASPA, the federal ban, was overturned in 2018. It initially used technology from Kambi, but it switched to an in-house platform created by SBTech after it merged with that company in a three-way SPAC deal in 2020. DraftKings is now the No. 2 online sportsbook in America by market share, behind FanDuel, and it has also launched an impressive online casino, so it makes sense for the company to expand into horse racing.
“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 Jason Robins , the co-founder, chief executive and chairman of DraftKings CEO. “Due to the structure of the agreement, we expect this new product offering to be immediately profitable.”
DK Horse will launch “in the coming months,” according to the company. At first, it will be a standalone app, which will require customers to sign up for a separate account. The online sportsbook, casino and DFS site are all integrated, so players can create a single account for all three and earn Dynasty Rewards points at any of them. However, DK Horse will initially be separate, although there are plans to integrate it into the existing DraftKings product suite a little further down the line.
Boost for CDI
The deal provides CDI with a timely boost following its withdrawal from the ultra-competitive online sports betting industry. It launched two brands – BetAmerica and then TwinSpires Sportsbook – which failed to keep pace with FanDuel, DraftKings, BetMGM and Caesars Sportsbook in a fiercely competitive industry, so the company pulled the plug on them. It decided to treat sportsbooks as potential customers instead of competitors. At an earnings call in July, chief executive Bill Carstanjen was bullish on the concept of selling a new white-label racebook product to sports betting operators.
“We believe fundamentally horse racing content should and will become available over time on sports wagering platforms to reach every wagering customer across the US,” he said at the time. “We intend to be a leading distributor, either directly to customers of TwinSpires or under a B2B model that enables the online distribution of horse racing content to millions of new customers that have opened online sports wagering accounts. “Given our expertise and extensive knowledge of pari-mutuel wagering, we have the technical expertise, access to racing content and technology to seamlessly integrate pari-mutuel wagering into existing third-party online sports wagering platforms.”
It has only taken a few months for CDI to land a major client in DraftKings. “We believe the depth and quality of our online offering through TwinSpires is unmatched in horse racing,” said Carstanjen after announcing the news. “We are excited to establish this relationship with DraftKings and to deliver a full end-to-end white-label ADW [advance deposit wagering] solution that will introduce their significant base of sports betting customers to horse racing wagering.”
Advance deposit wagering simply means that horseplayers bet on racing with a funded account, as is the case with online sports betting and casino gaming. Historically, some credit shops would allow players to bet without requiring an advanced deposit, and they would then settle up at the end of the month, so the term advance deposit wagering was created to distinguish more conventional betting sites from them. TwinSpires and TVG are the main advance deposit wagering sites in the country, but the sportsbooks are increasingly ramping up their presence in this sector.
DraftKings Hit by Credential Stuffing Attack
Last week, DraftKings was hit by a credential stuffing attack that saw hackers steal $300,000 worth of customers’ funds. The hackers took a $5 deposit, changed passwords, enabled two-factor authentication on a different phone number and withdrew as much money as they could from victims’ linked bank accounts. Customers vented their frustration on social media, but DraftKings insisted that its systems were not breached, and it promised to “make whole” any customers that were affected.
“We currently believe that the login information of these customers was compromised on other websites and then used to access their DraftKings accounts where they used the same login information,” said co-founder and president Paul Liberman. “We have seen no evidence that DraftKings' systems were breached to obtain this information. We have identified less than $300,000 of customer funds that were affected, and we intend to make whole any customer that was impacted.”