DraftKings finally has a timeline for ending its partnership with Kambi.
Kambi provides the software and platform to help run different online sportsbooks around the world.
The agreement between the two companies will last until September 30, 2021.
The sportsbook is ditching Kambi because of its recent merger with SBTech. Since SBTech is one of Kambi’s competitors, moving away from the platform was a natural next step.
Kristian Nylen, Kambi’s CEO, says the partnership between both companies has helped legitimize each of them in the world of online betting.
“Since partnering in June 2018, the Kambi-DraftKings relationship has proven to be highly rewarding for both parties, delivering first-class sports betting experiences to players across more states than any other sportsbook, and establishing Kambi and DraftKings as true leaders in their respective fields.”
DraftKings Sportsbook is the most popular online betting app in Indiana. So although the move doesn’t come as a surprise, it’s still certainly a significant one.
DraftKings merges with SBTech
SBTech and DraftKings finalized their $3.3 billion marriage back in April.
Diamond Eagle Acquisition Corp. bought out both companies and merged them together. The merger created a new internet gambling titan.
Ever since then, DraftKings has been a publicly traded company.
The move was an important one for DraftKings, because now it gets to cut out the middle man. Instead of paying Kambi for the software to run its sportsbook, it gets to use its own.
Previously, DraftKings leaned on the US market, while SBTech had a solid foothold in Europe. As one combined company, the new DraftKings gets the best of both worlds.
The merger is all about the long game. Expanding a sportsbook is an expensive task, and DraftKings is trying to spend money to make money.
Although the company lost tens of millions of dollars in 2019 because of its expansion into new states, that upfront cost will eventually lead to a solid revenue stream.
Online casinos are also a big part of the company’s future. They’re incredibly profitable, and even though they’re not currently legal in most states, including Indiana, DraftKings will be looking to get in on the action as it expands in the future.
The first step toward the company’s future will be to transition its sportsbook out of Kambi’s hands. That process could be getting started soon.
Move from Kambi to SBTech could come soon
Even though DraftKings will still be tied to Kambi until September 2021, the sportsbook could be moving over to SBTech sooner rather than later.
Per the new agreement between the two companies, DraftKings is allowed to move everything over to SBTech whenever it wants.
So theoretically, DraftKings could be using SBTech to handle its website and app within a few months. It could move things away from Kambi part by part, or it could do one big transfer of everything at once.
However, even after DraftKings switches over, Kambi will still be getting a piece of the pie. It will still receive a share of DraftKings’ revenue until that September 2021 deadline passes.
Since DraftKings still has to open its wallet for Kambi, moving things over in smaller pieces may end up making more sense. DraftKings already knows that it runs well with Kambi’s software. It can’t say for certain if the move to SBTech will be a smooth one.
Big software shifts like this can get messy, and a series of smaller moves could help avoid some problems. If all of DraftKings moves to SBTech overnight, there could be some unexpected technical problems at first. Moving things over individually would help DraftKings slowly address those problems before they happen.
Plus, the company is paying Kambi anyway, so it might as well let them handle the heavy lifting until their partnership expires.
The transition may end up being a slow one, but it will be wrapped up by the time October 2021 comes around.
In the meantime, now that DraftKings and SBTech are one combined company, it’ll continue to reap the benefits of its competitors that are still using SBTech’s software.
BetAmerica leaves SBTech for Kambi, GAN
Any company that partners with SBTech has to pay for the use of its software.
In Indiana, BetAmerica is the only sportsbook using SBTech as its platform right now.
But since DraftKings owns SBTech, all of the business BetAmerica does with the company directly benefits its competition.
That gave BetAmerica a decision to make: either keep handing DraftKings piles of money, or move to a different online platform. Unsurprisingly, BetAmerica chose the latter.
The sportsbook will be switching over to Kambi for its online software needs. GameStack, which is a GAN platform, will handle the account management side of things.
So DraftKings might be making some extra money off of BetAmerica right now, but that advantage won’t last forever.
