The Current: Reasons To Love And Hate DraftKings Sportsbook+
If you don’t have an opinion on DraftKings’ new subscription service called DraftKings Sportsbook+, are you even alive? You’re probably a corpse.
If you’ve somehow avoided this news or seeing anyone’s opinions on it, the basics are this:
For $20 a month, select DK sportsbook users can get payout boosts on parlays.
It’s only available in New York.
Users can get the first month free with a promo code.
You have to be “eligible” for the promotion, although DK doesn’t say much about who is eligible; suffice it to say not everyone can sign up right now.
Love it or hate it, it’s a fascinating effort from DraftKings to try something new in the US sports betting space. It comes after a botched effort at applying a surcharge to bets in states (like New York) with high tax rates.
I think the whole thing is brilliant for various reasons; time will tell if it’s brilliant or not. But here’s what I love about it, plus some reasons not to like it from the haters, of which I am sure there are many.
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Reasons to love DraftKings Sportsbook Plus
More parlays and incentivizing them: If you’re sitting around insisting that people have to place straight bets and find edges, I’ve got bad news for you. We’re in the parlay era, and nothing is going to change that. (The current daily fantasy sports industry is almost entirely built on parlays, if you hadn’t noticed.) It’s well-established at this point that sports bettors want lottery tickets — ie potential big payouts from small bets. So when people want to bet parlays, what do you do? You lean into that. You incentivize them to place more parlays by offering them bigger payouts. The vast majority of bettors are not going to make more money, and I am pretty sure most of them know that, just like they know they aren’t going to win MegaMillions tonight. But they want the dream of hitting a big parlay, and a few will win here and there. That’s the dream of the average bettor.
A creative solution to more revenue: The surcharge on winning bets was a terrible idea for generating new revenue. A subscription service is a great idea. People have to opt into it, so you’re not forcing anyone to pay more. You’re also getting them to make bets that will drive a higher margin. The question is how much takeup the product will receive, which leads us to…
It’s a low-leverage play for now: If it works, DraftKings has stumbled onto something it can do in more states and play around with the subscription model. If it doesn’t work, DraftKings can punt and move on. It’s easy to turn the page. It feels like a no-lose proposition.
Subscriptions can be great: There’s no guarantee that the subscription model will work out for DK, but there is tons of upside. 1. It’s a way to create more brand loyalty and engagement. People willing to fork over 20 bucks are almost certainly going to bet more and bet the types of bets DraftKings wants you to bet. 2. It’s the kind of subscription you can see being very sticky. I love the Planet Fitness story, for instance, where they keep their prices very cheap because people will keep the membership even if they don’t use it very much or at all.
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Reasons to hate DraftKings Sportsbook Plus
I am not sure I have much conviction about any of this, but I had to find some reasons not to like it, too:
More parlays and incentivizing them: If this sounds familiar from above, I did just copy the lead-in. People want to be mad about sportsbooks trying to get bettors to place bets that make it more likely they will lose money in the long term. If you want to be mad about that, have at it. They’re just doing what makes sense as a business while also giving people what they want.
It’s not for everyone: DraftKings is being coy here with “eligibility.” Just like DK and most other sportsbooks will limit sharp bettors, they probably aren’t going to let someone with an edge participate. That’s not shocking, but it’s worth saying out loud as well.
Is there a responsible gambling concern?: I am not certain there is, but it’s worth considering and interrogating. When someone is “subscribing” to a sportsbook, that is going to lead to some amount of bettors engaging more with the sportsbook, and potentially in an unhealthy way. Maybe some people don’t change their behavior at all; they might bet the same way while being happier to get increased potential payouts. But you could see how someone would want to “get their money’s worth” from the subscription by betting more often, betting more, etc. There’s a line between that kind of behavior being healthy and unhealthy. I would be interested to hear from some RG folks on this, and I’ll reach out.
Seeing new ideas in sports betting is exciting; lots of people will be watching to see if this works. It could end up in the trash bin of failed sports betting ideas, or it could be something we see more online gambling operations leaning into moving forward.
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