The owners of two NFL clubs have not disposed of their stakes in daily fantasy operator turned bookmaker DraftKings as the new season is weeks away from kicking off and sports betting legalization efforts are gaining pace in multiple states.
Major US sports media outlet ESPN reported on Tuesday citing unnamed sources that New England Patriots owner Robert Kraft and Dallas Cowboys owner Jerry Jones have not sold yet their stakes in the daily fantasy company, which recently launched a mobile sports betting app in New Jersey.
Both businessmen have small stakes in DraftKings, less than 5% each, sources have confirmed. Asked to comment on the matter, a Cowboys spokesperson has told ESPN that Mr. Jones indeed owned a stake in DraftKings but his ownership was through sports hospitality company Legends and not through the football team.
However, it turns out that both Mr. Kraft and Mr. Jones are not in a conflict of interest, or at least not yet. Brian McCarthy, a spokesman for NFL, has told ESPN that under existing policies of the league, members are allowed to own equity interest in a given business that does not generate more than a third of its overall revenue from gambling services.
Where Does DraftKings’ Betting Product Stands At?
At present, fantasy sports is DraftKings’ primary product. However, in a recent interview with Yahoo Finance, CEO Jason Robins said that it will not be long before the company begins deriving the majority of its revenue from sports betting. He added that they expect that to happen in the next two to three years, depending on “how fast the states roll out”.
DraftKings joined the US sports betting scene, which is gradually expanding with every day passing, at the beginning of August. The company launched a mobile wagering product in New Jersey, a result from its partnership with Resorts Casino Hotel. DraftKings Sportsbook actually became the state’s first mobile betting app. The product offers different types of betting, including in-game bets and pre-season betting, and makes it possible for bettors to exit a wager through a ‘cash out’ feature.
Gambling consultancy Eilers & Krejcik Gaming estimated that DraftKings’ revenue from daily fantasy sports stood at around $218 million in 2017. It is to be seen how much the company will generate from sports betting during the first month and throughout the rest of the year.
ESPN points out that should DraftKings’ betting revenue eventually lines up and eclipses its proceeds from daily fantasy sports, it will be a costly move for Mr. Kraft and Mr. Jones to dispose of their stakes in the company. Still, they will be forced to divest, under NFL’s current policies.
NFL has long been one of the biggest opponents of sports betting, arguing that it threatens the integrity of sports The football league is one of the four major US leagues that are seeking a share of the revenue generated by the nation’s sports betting industry in the form of an integrity fee, with NBA, NHL, and MLB being the other three.
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