DraftKings and FanDuel may be competitors in the sports betting space, but they would like to combine forces to enhance their casino operations in downstate Illinois.
At the Illinois Gaming Board (IGB) meeting on Wednesday, the two companies made an initial request to fuse DraftKings at Casino Queen and FanDuel Sportsbook & Horse Racing (formerly Fairmount Park).
The board will now evaluate the request.
The two facilities are less than 10 miles away from one another. Both are in the St. Louis area.
The deal would pave the way for FanDuel to offer casino gaming at its horse track in Collinsville, and it has discerned that partnering with DraftKings at Casino Queen in East. St. Louis (pictured above) is the best way to do so.
Key figures negotiated this clause in the 2019 gaming package. From Sec. 7.7 of the Illinois Gambling Act:
“An organization gaming licensee may enter into a joint venture with a licensed owner to own, manage, conduct, or otherwise operate the organization gaming licensee’s organization gaming facilities, unless the organization gaming licensee has a parent company or other affiliated company that is, directly or indirectly, wholly owned by a parent company that is also licensed to conduct organization gaming, casino gaming, or their equivalent in another state.”
Why do DraftKings and FanDuel want to work together?
Simply put, DraftKings and FanDuel believe the deal would be mutually beneficial.
Casino Queen Holding president and CEO Terry Downey said in March:
“We are thrilled to expand the Casino Queen family into neighboring Collinsville and believe the proximity of Fairmount and Casino Queen will allow us to offer unique opportunities for guests and Team Members that were not previously available in our community. This partnership between two local iconic brands will bolster gaming and entertainment opportunities in the Metro East region.”
“I believe in the future of horse racing in Illinois and look forward to the relationship between Casino Queen and Fairmount Park,” Soo Kim, CEO of Standard General, which owns Casino Queen Holding, added.
When you realize how close the two facilities are to one another, this makes sense.
Consider another Illinois case: Churchill Downs‘ lack of desire to add casino gaming to Arlington Park once it purchased a majority stake in Rivers Casino.
Arlington and Rivers are about a 20-minute drive apart. Many believe that Churchill Downs was not interested in turning Arlington into a “racino” for fear that it would take away customers from Rivers.
The same logic applies here. DraftKings at Casino Queen and FanDuel Sportsbook & Horse Racing are less than 15 minutes apart.
It’s also not as densely populated of an area as Chicagoland. So, rather than compete for the same customers, DraftKings and FanDuel can cross promote and both reap the benefits.
DraftKings at Casino Queen is a popular, established casino in the St. Louis area. FanDuel would have been fighting an uphill battle from a casino perspective in trying to poach customers.
On the other hand, DraftKings would like to get in on the horse racing action and reach a new kind of customer. This allows them to do so.
FanDuel edged DraftKings in April sports betting
As previously mentioned, DraftKings and FanDuel are fierce competitors in the sports betting space.
That’s especially true in Illinois. The two have become the clear market leaders in the Land of Lincoln.
Illinois produced $537.2 million in April sports betting handle, the second-highest figure in the US for the month.