DraftKings Unveils All-in-One ‘Super App’ with Online Sports Betting at Crossroads

DraftKings earlier this week unveiled what it called a “Super App,” which will bring online sports betting, prediction markets, casino, and lottery gaming to one location on the mobile devices of its customers nationwide.

The announcement came during the Boston-based gaming company’s Investors’ Day presentation. The hour-long webcast outlined DraftKings’ strategy to grow over the next five years, with the industry-wide gross revenue opportunity ranging between $55 billion and $80 billion by 2030.

The Super App, as CEO Jason Robins described during the webcast, takes the company’s green app (the sportsbook and casino app) and adds prediction markets to it. DraftKings plans to rollout the app in phases, with the first tranche expected to go live later this month, coinciding with the NCAA Tournament. 

That app already draws more than 80% of DraftKings customers.

We will now have a sports product everywhere for customers across the entire country,” Robins said. “Number two, it allows us to leverage our huge scale with our brand and our marketing footprint. All of our national marketing now will be working across the entire country instead of across a subset of states where we have sports betting.”

Stock Rising After ‘Super App’ Announcement

Perhaps Monday’s presentation has swayed some investors. 

While initial trading showed the stock dropping by 5%, it recovered quickly and ended the day at $23.82 per share, a drop of just two cents. The company fared better Tuesday, as shares rose by 63 cents (or 2.6%) to $24.45 at closing. After Thursday’s trading, the stock was up to $25.46, a nearly 7% jump from Monday’s close.

Still, DraftKings’ stock has lost roughly half of its value in the last six months. While there are likely several factors involved in the drop, including economic concerns, the downturn has coincided with the rise of prediction markets offering contracts – or shares – on sports events.

Robins has made it clear that DraftKings sees prediction markets as a growth opportunity, and by creating an all-inclusive app, its customers will be able to use the same app to bet on sports either through the company’s sportsbook or the prediction market platform across most of the country. That would provide significant value for some who would prefer not to fund separate accounts for wagering based on the state where they’re physically located at that time.

Analysts also appear to like where DraftKings wants to go.

I think it’s a smart move for for DraftKings, as long as it doesn’t confuse the customer,” Chad Benyon, a gambling industry analyst and head of U.S. research for Macquarie Capital. “There’s certainly gonna be those moments where there’s a little bit of confusion there, but I think long term, it is the right approach for companies to have this, because what DraftKings has said is they literally have almost 10 apps. “

There are, of course, a couple of concerns with DraftKings dual sportsbook-prediction market model.

Caught Between a Rock and a Hard Place

First, the question of whether prediction markets can offer sports contracts remains unsettled. Despite what Commodity Futures Trading Commission Chairman Mike Selig may say, the courts and/or Congress will get the final word on the matter.

DraftKings may be hedging its bet by offering both, but there’s still risk involved – namely alienating lawmakers and key stakeholders (such as California tribal nations) in the remaining few states that have yet to legalize sports betting.

Maybe DraftKings can still mend fences with California tribes if prediction markets eventually are blocked from offering contracts on sporting events. However, it would likely come at a significant cost.

Understandably, DraftKings and other sportsbooks have had to face a less-than-envious choice: Cede states like California, Texas, and Florida to Kalshi and other PMs, or join them and hope it does not affect their business down the road should the federal government ultimately block prediction markets from venturing into sports.

The Responsible Gaming Question

The other question pertains to engagement. As noted above, the SuperApp will allow DraftKings customers to use the same app more often. For example, if a user splits their time between New York and Florida, they would be able to use the SuperApp for the sportsbook in New York and the prediction market in Florida, all while accessing funds from the same wallet.

During his presentation, Robins spoke to his company’s “LTV flywheel,” the process they use to attract new customers and turn them into lifetime players who can generate long-term value for the company.

He called it “an absolute machine” that will help DraftKings maintain its status as one of the top gaming companies in the U.S.

Those customers become engaged, truly love our products and generate significant long-term retention, loyalty and high LTVs,” he said. “Higher LTV, of course, translates to growing gross profit.” 

Giving customers more reasons to come to your store is a natural business practice. However, when it comes to gambling, increasing easy access can lead to problematic behaviors. PokerScout.com’s Alex Weldon touched on that subject in a recent piece looking at a lawsuit against social media giant Meta and the potential implications for online gambling.

DraftKings, to its credit, highlighted its responsible gambling practices during its presentation, saying it will apply the same standards it uses for sports betting for prediction markets, too.

“We believe responsible engagement shouldn’t depend on the product, it should be consistent across the entire DraftKings experience,” Chief Responsible Gaming Officer Lori Kalani said during the presentation. “Responsible trading focuses on education, transparency and informed participation. Customers can set deposit limits, take cool-offs or self-exclude, and they can access dedicated resources through our Responsible Trading Center.”