FanDuel Acquisition Could Be Needed for Nevada Entry

Posted on: April 4, 2024, 03:22h. 

Last updated on: April 5, 2024, 09:03h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Despite increased competition from other states, Nevada remains one of the US meccas of sports wagering, but two of the industry’s largest operators — DraftKings (NASDAQ: DKNG) and FanDuel — still don’t offer their services in the state.

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The FanDuel Sportsbook logo. It could take an acquisition for the company to enter Nevada. (Image: FanDuel Sportsbook)

When that will change remains murky, but executives from FanDuel and parent company Flutter Entertainment (NYSE: FLUT) shed some light on the matter at a Wednesday meeting of the Nevada Gaming Control Board (NGCB), noting it could take an acquisition for the largest online sportsbook operator to enter the Silver State.

Flutter CFO Paul Edgecliffe-Johnson told members of the NGCB that FanDuel is looking to expand in any state, including Nevada, that makes “good commercial sense” for the company. He said there are Nevada-specific complexities that, without an acquisition, make it difficult for FanDuel to enter the state, adding “we keep everything under constant review.”

Namely, Nevada requires that bettors who want online sports wagering accounts enter a brick-and-mortar casino and fill out paperwork to get those accounts. Most states that offer mobile sports betting don’t have that cumbersome requirement. Neither DraftKings nor FanDuel operate land-based casinos.

FanDuel Has Small Nevada Presence

While DraftKings has an office in Southwest Las Vegas, FanDuel’s presence in Nevada is even smaller. It provides branding and odds to Boyd Gaming’s (NYSE: BYD) Fremont Hotel Casino in downtown Las Vegas, and that’s it for the moment.

Boyd owns 5% of FanDuel and there is some speculation that with the casino operator revamping its Suncoast Hotel & Casino in suburban Las Vegas, it could use a similar relationship with FanDuel there when its new sportsbook opens. But even that wouldn’t result in FanDuel offering mobile betting in Nevada. Flutter’s Padraig O’Riordain reiterated the acquisition element to the NGCB.

Our challenge in relation to Nevada is we have very developed risk and trading from a sports perspective globally,” O’Riordain said. “Without acquiring something and having different licensure here, we can’t bring that in. For us, we need to work out how we’re going to solve that issue. It’s under consideration.”

FanDuel and Flutter executives didn’t elaborate on any potential acquisition plans in Nevada.

Nevada Missing Out

Some experts note that Nevada, which doesn’t levy a state income tax, is missing out on crucial revenue by continuing to employ the in-person registration requirement. That keeps big-name operators such as FanDuel and DraftKings out of the state. In the US, those two operators, by some estimates, control almost 80% of the online sports wagering market.

Likewise, rising players such as ESPN Bet and Fanatics aren’t operational in Nevada due to the in-person registration requirement.

Of that quartet, only ESPN Bet could change its Nevada status over the near term because owner Penn Entertainment (NASDAQ: PENN) runs the M Resort Spa Casino in Henderson. Penn recently signaled that ESPN Bet’s Nevada status is unlikely to change anytime soon.