Massachusetts is home to one of the biggest and most important players in all of gambling today. DraftKings now offers sports betting, casino gambling, and daily fantasy sports wherever those activities are legal in the United States. In some states, like New Hampshire, DraftKings is the only legal online gambling provider.
Of course, DraftKings began life as a mere DFS site. It was not the first company to offer short-term fantasy contests, but it quickly grew to become synonymous with the practice. However, its trajectory changed forever in May 2018. A US Supreme Court decision that placed the question of sports betting in the hands of each state government opened the door for DraftKings to take on the gambling establishment. Sacred cows of the industry like MGM Resorts and Caesars suddenly found themselves having to contend with this plucky upstart that didn’t even have a decade of experience under its belt.
This page is the story of how one Massachusetts company expanded dramatically beyond the borders of the Bay State. Here is the history of DraftKings, which now offers legal online sports betting in Massachusetts.
DraftKings opened for business in 2012. Its three co-founders — Jason Robins, Matthew Kalish, and Paul Liberman — were executives at the online printing company VistaPrint, but they wanted to apply the same concepts about customer acquisition and analytics to a passion the three shared — fantasy sports. The company’s first steps occurred in Liberman’s apartment in Watertown, but it quickly moved beyond those four walls.
The first DraftKings contest was a one-on-one matchup slated for Major League Baseball’s opening day in 2012. Ironically, the launch coincided with that of StarStreet, another Massachusetts DFS provider that DraftKings would purchase only two years later. DraftKings had its work cut out for it beyond its fellow Bay State company, however. Along with a host of other companies that have since fallen by the wayside or been absorbed, DraftKings had to compete with FanDuel Sportsbook, which was every bit the titan of the industry that it is now.
The rise of DFS (2014-15)
Fortunately, DraftKings’ shrewd marketing strategy paid dividends in a short time. In less than two years, the company was reporting 50,000 active users on the site daily. More than one million users had registered accounts. Most impressively, the company had awarded $50 million in prizes in 2013 alone — its first full year of business.
By 2014, DraftKings had grown to become the second-largest DFS provider in the market. It further cemented its status as one of the market leaders when it acquired the third-largest company, DraftStreet, in July 2014. One month later, in addition to its aforementioned purchase of StarStreet, DraftKings received $41 million in investment funds from several prominent venture capital firms.
Part of DraftKings’ strategy for success was connection and partnership with the major sports leagues in the country. Major League Baseball invested an undisclosed amount with the company in 2013. DraftKings became the official DFS provider for the National Hockey League in 2014 and for Major League Baseball in 2015. These deals came with advertising placement in front of the most likely candidates to play DFS — sports fans.
The company continued to partner with prominent businesses as it grew, and it turned toward media outlets shortly after closing the deal with MLB. In July 2015 alone, DraftKings announced funding and deals with ESPN and Fox Sports worth $550 million. However, trouble began to brew for the company because of the unsettled question about whether daily fantasy sports contests were a new form of gambling and, frankly, some of the corporate moves that the growing company decided to make.
DraftKings in peril
Only months after everything seemed to be going smoothly for DraftKings, the company began having to withdraw its service from several states. The attorneys general of New York, Illinois, Texas, Mississippi, Nevada, and Hawaii, to name a few, had each opined that all fantasy sports contests constituted violations of their states’ sports betting laws. Because of all the turmoil in court, ESPN ended its deal with DraftKings less than a year after announcing it. In addition, financial companies, such as Citigroup and Vantiv, decided not to allow transactions with DraftKings.
DraftKings was not the only DFS service under fire. Archrival FanDuel was experiencing similar issues. The two dueling companies decided that moving forward together might be a smarter choice than competing with each other. As a result, DraftKings and FanDuel announced that they would merge in November 2017.
Unfortunately, the joint approach wasn’t any more successful than the separate paths. Because the new DFS giant would control roughly 90% of the entire market, the Federal Trade Commission immediately filed suit against the merger under charges that it would violate antitrust laws. The threat worked, and the two companies called off the merger after eight months under fire.
However, the days of struggle and legal suspicion for DraftKings were soon ending, thanks to some other dealings in the US court system. 2018 proved to be a pivotal year for all American gambling companies.
DraftKings pivots to sports betting
In May 2018, the US Supreme Court struck down the Professional and Amateur Sports Protection Act, or PASPA, which had served as a federal ban on sports betting in nearly every state since 1992. Suddenly, each state government gained the power to determine whether sports betting was appropriate for its citizens. With this new freedom, DraftKings detected a golden opportunity.
DraftKings hustled into nearby New Jersey and became the first online sportsbook to open for business outside of Nevada in the United States. It enjoyed a de facto monopoly over the Garden State’s market for nearly a month before competitors began to appear. In that time, it secured a tremendous amount of market share that allowed the company to soar to the top in the state. To this day, DraftKings remains one of the top sportsbooks in New Jersey.
One of the reasons the company found so much immediate success with its DraftKings Online Sportsbook app — besides the utter novelty of it — was the innovations that it brought to American sports betting. First and foremost, DraftKings was the first sportsbook app to offer a cash-out option. This option, initially known as the live ticket system, allowed bettors to close out their open tickets if their bets appeared likely to win. They had to surrender a few of their profits to do so, but the early settlement of the bet allowed them to guard against late-game collapses. The cash-out option has since become a virtual must-have for every US sportsbook app.
DraftKings also offered a customized approach to each patron through its betting carousel. The carousel is a rotating display that suggests wagers to players based on stated preferences and betting histories. In a way, everyone’s interaction with DraftKings was different, and that feature was something bettors hadn’t really seen before.
DraftKings goes public
DraftKings distinguished itself over the next three years as one of the most active sportsbooks to enter new sports betting states. Whenever a new state came online, it seemed as though DraftKings was always one of the first to launch — to the point that it almost became a trope. Because of its aggressive approach, DraftKings quickly grew to be one of the more prominent companies in all of the gambling — not just sports betting.
Because growing companies need infusions of capital to keep feeding the fire, they often go public with a stock offering. DraftKings took this step in 2020 but in a slightly unusual way. Rather than proceeding through the typical initial public offering, DraftKings engaged in a reverse merger with Diamond Eagle Acquisition Corp., a special purpose acquisition company that was already trading on the Nasdaq. The merger also included gambling tech provider SBTech, creating a large amalgamated gambling entity. It began trading publicly in April 2020 under the symbol DKNG and a market capitalization of $3.3 billion.
Initially, the fortunes of the company soared to incredible heights. At one point, its market capitalization (the combined value of all shares of stock) exceeded $20 billion. However, the stock price has declined significantly over the past year or so, from a share price of nearly $72 to its current price of around $22 per share.
At the basis of the decline is DraftKings’ commitment to operating at a loss for the short term. The fees and promotional expenses involved in launching in new states create a scenario common for new businesses, where it takes time to become profitable. Because each state launch is a discrete event, DraftKings is repeating this cycle over and over. The dip is part of the reason that some analysts are predicting DraftKings might become the subject of a takeover or acquisition in the near future.
Nevertheless, DraftKings continues to expand its profile beyond the confines of its Back Bay headquarters in Boston. In addition, DraftKings continues to be at the forefront of new sports betting state launches. Most recently, it launched its app in Massachusetts on March 10.
Key people at DraftKings
DraftKings is one of the top gambling companies in the world. However, like many companies, it began quite humbly. Three employees at online printing company VistaPrint found that they shared a common passion for fantasy sports and started talking about possibilities in a Watertown apartment. The story of DraftKings must begin with these three entrepreneurs.
Jason Robins is the CEO of DraftKings and manages the overall direction of the company. A Miami native, Robins enrolled at Duke University in 1999 and graduated with a degree in economics in 2003. He then worked in the marketing department at Capital One before making the fateful move to VistaPrint in 2008. Since helping to found DraftKings, Robins has appeared on numerous lists to honor successful young businessmen. He attained billionaire status in early 2021.
Matt Kalish is the president of DraftKings North America and is, in many ways, the “money” guy of the three founders. Kalish has degrees in both economics and computer science from Columbia and an MBA from Boston College’s Carroll School of Management. He worked for five years in the financial departments of companies like Fidelity, Microsoft, and Capital One before becoming a marketing manager at VistaPrint. He was DraftKings’ chief revenue officer for nine years before changing titles to his present role.
Paul Liberman is the president of global product and technology at DraftKings and is the most technically inclined of the three founders. Incidentally, the company began in a spare bedroom of Liberman’s apartment. He has degrees from Worcester Polytechnic Institute in electrical engineering and computer science and spent most of his post-college career at VistaPrint, where he eventually became a senior manager of marketing and analytics. At DraftKings, he has served as the CTO, CMO, and COO at various stages of the company’s journey.
Other key people
Of course, as a company grows, it requires more people and more expertise to deal with its expanding profile. There are now many top professionals who work in key positions at DraftKings, including the following:
- Jason Park — chief financial officer
- Jennifer Aguiar — chief compliance officer
- R. Stanton Dodge — chief legal officer
- Travis Dunn — chief technology officer
- Graham Walters — chief people officer
- Ezra Kucharz — chief business officer
- David Lebow — chief of staff
- Brian Angiolet — chief media officer
- Shay Berka — chief international officer
This list is simply the people at the top, though. There are hundreds of bright folks who help make DraftKings what it is today.