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DraftKings and FanDuel Thursday morning got approval from the Arkansas Racing and Gaming Commission to be vendors in the state, opening the state to its first two national sports betting operators.
Since voters approved online sports betting in November 2018 and the first platforms went live in March 2022, those in Arkansas have had access to three white-label, or local, platforms.
In Arkansas, sports betting operators must get market access through one of three racetrack casinos — Oaklawn, Saracen, or Southland. Since launch, BetSaracen has dominated the market, and is the lone entity opposed to allowing national operators in. Saracen Casino Resort CMO Carlton Saffa told the commission Thursday that having national brands won’t necessarily improve online sports betting in the state, and argued that if “national brands” were the panacea, then casinos in Arkansas would have already partnered with them for their brick-and-mortar properties.
But Oaklawn’s Wayne Smith told the commission that revenue would increase by up to five times with national brands, and that revenue would help to continue to help the state’s horse racing market.
Arkansas has a unique setup
In Arkansas, commercial operators are required to share 51% of their revenue with partner casinos. The setup is unique, and one that national operators argued against during the legalization process. That number, while not a tax, is a massive chunk of an operator’s profit. Some major operators are active in the handful of states that require a 50% or higher tax, but in most cases, that is either in exchange for a monopoly, in partnership with a state lottery, or in a large state like New York that operators feel they must participate in.
In Arkansas, the goal was to keep as much wagering money as possible within state lines. In part because of the revenue share, major operators stayed out of a market that serves about 3 million people. And so was born the only digital state with locally branded platforms as the only option.
Saffa pointed to the contradiction between the stance of national operators in 2018 and now, but conceded that as sports betting as proliferated, markets have matured. In addition, he pointed to the fact that the commission was licensing groups that it has sent out cease-and-desist letters to in the past. DraftKings and FanDuel operate unregulated daily fantasy contests in Arkansas.
In addition, the state’s attorney general issued an opinion that prediction markets, which DraftKings and FanDuel both operate “violate the law.”
“If past is prologue,” Saffa said. “They play in the gray areas.”
He also suggested that because promotional deductions will be allowed, the state won’t see a meaningful tax bump.
Oaklawn’s platform is currently powered by SBTech while Southland is partnered with Betly. Per discussion in the meeting, FanDuel is applying for a license to be a vendor for Oaklawn while DraftKings will be a vendor for Southland. Representatives from both casinos said the platforms would still have their brands on them, and could read something like, “Oaklawn, powered by FanDuel.”