DraftKings appears like it will be taking over as the legal sportsbook operator and brand in Oregon.
DraftKings on the Oregon Trail
The Oregon Lottery intimated during its commission meeting on Friday that it would be moving from its current system — the Oregon Scoreboard app — to one powered by DraftKings.
DraftKings is already involved with the Oregon Lottery, indirectly. The Oregon Scoreboard app is run by SBTech, which DraftKings acquired in 2020, but SBTech’s contract began prior to that acquisition.
Here’s Oregon Lottery Director Barry Pack on Friday:
“In Scoreboard news, with all of the events over the last year, you may have missed that our Scoreboard platform partner SBTech was purchased by DraftKings. DraftKings is well-established in the US and this presents a lottery with opportunities, including benefitting from the economies of scale offered by the company.
“We are in initial discussions with them about a new contract to transition Scoreboard off the SBTech platform and onto the DraftKings platform, as well as any other potential products and services. It is likely I will be coming to you in the March meeting for approval of a major procurement for this purpose.”
“Since acquiring SBTech in April 2020, DraftKings has had conversations in the ordinary course of business with the Oregon Lottery about how best to serve Oregonians who are passionate about sports betting,” a spokesperson for DraftKings told Legal Sports Report.
Still an SBTech product, however?
Interestingly, DraftKings also noted that it would be moving its business to the SBTech platform during its earnings call on Friday. The company also noted it would be testing that move in a single state initially, making the Oregon sportsbook app a possibility for that test.
The contract between SBTech and the Oregon Lottery has been the source of some consternation in the state, as SBTech fought to hide the details of its arrangement in Oregon.
It’s not clear how the new contract with DraftKings might work. However, Scoreboard currently operates as a standalone product using SBTech’s platform. Deploying a DraftKings sportsbook app that is ring-fenced to Oregon as a monopoly would significantly cut down any costs associated with running an app in the status quo. DraftKings runs a sports betting app tailored to nearly every other state where online sports betting is legal.
Oregon sports betting underperforms and is still a monopoly
The bad news for Oregon sports bettors is even with the change, online sports betting will be a monopoly endeavor between the lottery and DraftKings.
Monopolies in general have underperformed markets where there is a competitive industry. But at least in New Hampshire — another state where DraftKings operates a state-sanctioned monopoly — the results have been better.
In fact it’s interesting to compare the two markets. Oregon has a population of 4.2 million, compared to 1.3 million in New Hampshire. Despite the disparity in population, DraftKings in NH generated more betting activity than Oregon Scoreboard in 2020, even though Oregon launched its betting app first.
DraftKings handled more than $350 million in wagers in 2020, compared to the Oregon Lottery handling $300 million.