DraftKings has abruptly shuttered its paid Daily Fantasy Sports contests in Oregon in the wake of the company’s ongoing bid to take over the state’s sports betting. The Boston-based operator said it would no longer accept DFS entries as of Monday, July 26, according to various emails sent to customers.
DraftKings has been in discussion to take over the “single-source” sports betting operation in Oregon, which has run its legalized industry through a monopolistic model.
Currently, the only legal option for the Oregonian bettors is to place an online bet through the lottery-run ScoreBoard app.
The Oregon Lottery reportedly have brought those negotiations back a few years when it allowed DraftKings to operate DFS in the state.
DraftKings Disagrees with Lottery But Sees Bigger Picture
DraftKings said some questions had been raised as to whether paid DFS contests are permissible under Oregon law in connection with previously disclosed discussion with the Lottery to potentially transfer Scoreboard on the DraftKings platform.
The Boston-based company said while it disagrees, it values the relationship with the Oregon Lottery, and thus DraftKings has decided to stop fantasy sports contests in Beaver State effective July 26, 2021, in order to keep sports betting discussions alive.
How Have We Reached Here?
Oregon sports betting launched its online sports betting in Oct. 2019, following a partnership with SBTech, a global company in sports betting technology. The partnership created an app – Scoreboard – which has been the sole option for anyone who lives in Oregon and wants to place a legal bet.
Last year, the Bulgaria-based SBTech merged into DraftKings as a result of the American giant operator’s combination with SPAC Diamond Eagle.
The plan for the Scoreboard app is to “transition” to the DK’s sports wagering platform, according to the company.
As part of the discussions between DraftKings and the Oregon authorities, the Boston-based operator is shuttering its DFS operation in the state. The legality of DFS operations as a contest activity remains in a “gray” area, though some DFS operators have continued to operate in Oregon without a clear ban.
Talks to switch the Scoreboard app to the DraftKings Sportsbook were first revealed by Lottery Director Barry Pack in February.
FanDuel Will Continue to Operate DFS in Oregon
While DraftKings has voluntarily shuttered its DFS operations as it pursues the more lucrative sports betting partnership with the state, the operator said it still “respectfully disagrees” with the state’s DFS position.
Meanwhile, FanDuel – the biggest rival and the leading operator in the US market – tweeted it will continue to serve Oregon DFS customers.
While the state law does not mention DFS, DraftKings or any operator doesn’t necessarily have to discontinue operations.
Nearly half of US states have legalized DFS games since crackdowns took place six years ago. DFS operators usually only avoid those state whose attorney general explicitly say the contests are illegal.
The state lawmakers attempted in vain to legalize DFS in Oregon in 2017. However, neither the state law nor its attorney general’s office has mentioned the legality of daily fantasy sports.
Can DraftKings Lift an Under-Performing Market?
Oregon sports betting has been an under-performing market, and it is too early to say if DraftKings can lift the online sports betting in the coming months. Beaver State – the 27th largest with a population of nearly 4.2 million – had a sports betting handle of about $25 million in June.
For comparison, Iowa – with a 3.2 million population – reported a sports betting handle of $111 million. The four-time higher handle than Oregon sports betting is thanks to Iowa’s competitive market, allowing multiple operators.
Colorado sports betting – with a 5.8 million population – posted $249 million in May sports betting handle, which is 10 times higher than Oregon’s.
Another limitation for the industry is that the single-sourced lottery app does not allow Oregonians to bet on college sports.