You’ve probably heard it too many times by now: DraftKings was born in Massachusetts. It’s based in Boston.
But its backstory — how three disillusioned corporate American friends turned $25,000 into the money-making sports betting behemoth it is today — is worth diving into.
What do you do when you have a keen interest in creating a company and don’t have much to lose? How about tossing your meager life savings in with a few pals on what would some day be one of the biggest mobile sportsbooks in the US?
That’s what Matt Kalish decided to do with his friends Jason Robins and Paul Liberman in a small townhouse in Watertown, a suburb west of Boston, more than a decade ago. That’s how DraftKings began.
Today, in what seems like a blink of an eye since it was founded, DraftKings boasts more than 1.6 million monthly users and reported as much as $25 billion in total handle for 2022. That’s out of the estimated $93.4 billion in handle nationwide, according to the American Gaming Association.
With Massachusetts online sports betting launching March 10, and DraftKings poised to have huge success in its home state, we decided to look back on the humble Boston beginnings of this sportsbook giant.
From corporate America to fantasy sports kings
If Capital One and VistaPrint hadn’t been so uninspiring, the history of DraftKings would look different and may have never happened.
But Kalish, a marketer for VistaPrint in Massachusetts, was so dissatisfied with his middle management position in 2011 that he and Robins and Liberman frequently spent their time together outside work discussing business ideas.
Even though not all the ideas were gold, it only takes one shimmering pan of minerals to strike it rich.
That’s what DraftKings was.
“We were playing poker, in the softball league (together) and playing fantasy leagues,” Kalish said in an interview for the Huh? Podcast in 2021. “We had entrepreneurial interest as well. Even though we were doing well in corporate America, it didn’t seem fast enough.”
It was Liberman who fixated on the idea of a fantasy sports product that didn’t require a long-term investment. At the time, fantasy sports was based on a full season of professional sports. That meant players had to draft a team and keep up on roster moves for many months.
“I had almost nothing to lose,” Kalish said.
At the age of 30, he left a $60,000 job to start DraftKings. He used every penny of the $9,000 he had in the bank to start the company with the two others.
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It started with $25,000
With $25,000 from the three young men, DraftKings hired a lawyer and incorporated in Massachusetts. Within a few months, they were using their first business plan to attract investors. It was crucial to illuminate the intention of the company as a sports entertainment product that could enhance the experience.
“Our product is for skin-in-the-game sports fans,” Kalish said.
With $1.4 million secured in Series A funding, DraftKings had enough to build its first mobile app and concentrate on product features. Amazingly, in less than three months from prototype to app, DraftKings Fantasy Sports was available for download by opening day of the 2012 baseball season.
At the time, DK only offered an MLB DFS product. But it quickly became popular with fans who wanted an easy way to pick a fantasy sports team and wipe the slate clean the following day.
“At first our goal was to figure out what people liked and what they wanted in fantasy sports,” Kalish remembered in a 2015 online interview.
DraftKings was not revolutionary. In their own backyard in Massachusetts, another company called StarStreet was already building a similar fantasy sports product. But eventually, DK would prove to be unstoppable.
By 2014, it would buy StarStreet. The company was clearly the champion of sports fantasy in Boston.
Soon, it would dominate outside state lines.
DraftKings Sportsbook officially launched in August 2018
By 2018, there were rumblings that the US Supreme Court would erase barriers for states to legalize sports betting.
Anticipating a new market, DraftKings studied the industry in Europe, and when New Jersey opened as the first new legal state in August 2018, DraftKings Sportsbook was born.
How did DraftKings create DFS and later become a market leader in mobile sports betting?
By quickly identifying trends and leveraging analytics.
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Co-founder Robins, who was a data analytics specialist at Capital One, said he and his partners rapidly realized fantasy sports and wagering was “a marketplace as well as a game.” That means when a consumer downloads the DraftKings app, the experience is so entertaining and so entwined with the sports they love, that the customer feels secure in performing transactions.
In 2021, DraftKings opened its newest headquarters in Boston, where 600 employees work in a 105,000-square-foot space.
All of that is the fruit from an idea that began with Kalish, Robins and Liberman, three young men restless with their jobs, hoping to make fantasy sports more fun to play.
- April 2011: Three friends and colleagues — Matt Kalish, Paul Liberman and Jason Robins — formulate the idea for a fantasy sports app that will allow customers to enter new contests daily.
- January 2012: DraftKings launches with $1.4 million in Series A funding. It incorporates in Massachusetts.
- April 2012: The first DraftKings app becomes available, offering daily fantasy sports contests. Customers can also play on the company’s website.
- April 2013: MLB teams with DraftKings for daily fantasy baseball.
- 2014: DraftKings purchases competitors DraftStreet and StarStreet.
- 2014: An additional $41 million is poured into the company by a new round of capital investors.
- 2014: DraftKings becomes the official DFS service of the NHL.
- 2015: MLB names DraftKings as its official partner for daily fantasy sports.
- July 2015: DraftKings inks a $250 million advertising deal with ESPN to promote fantasy sports on ESPN’s many media channels and incorporate fantasy sports into its content.
- February 2016: Citing concerns over court rulings in New York and other states regarding the legality of DFS apps, ESPN breaks its deal.
- November 2016: In a surprising move, DraftKings announces that it will merge with top rival FanDuel.
- 2016: The company secures a large investment, rumored to be as much as $300 million, from New England Patriots owner Robert Kraft.
- July 2017: The proposed merger of DraftKings and FanDuel is abandoned with a threat of legal action from the Federal Trade Commission for what it argued would create a monopoly.
- May 2018: The US Supreme Court strikes down the Professional and Amateur Sports Protection Act of 1992, calling it unconstitutional. The decision clears the way for states to legalize sports betting. At the same time, anticipating the move, DraftKings is training key people in the company to learn the sports betting industry in Europe.
- August 2018: DraftKings enters the sports betting market when it launches DraftKings Sportsbook in New Jersey.
- 2019: DraftKings reveals the “betting carousel,” a feature that allows customers to easily browse and place bets on popular sporting events in its mobile app.
- 2020: DraftKings Sportsbook continues to ether new markets, including Illinois, Michigan, Colorado, Tennessee and Virginia.
- July 2021: The DraftKings market cap is estimated at $20.6 billion.
- January 2022: DraftKings Sportsbook debuts in New York, which quickly becomes the biggest sports betting market in the country.
- May 2022: DraftKings acquires Golden Nugget Online Gaming.
- August 2022: Massachusetts lawmakers approve a sports betting bill.
- Jan. 31, 2023: Retail sports betting launches in Massachusetts.
- February 2023: After receiving approval from the Massachusetts Gaming Commission, DraftKings Massachusetts is expected to launch March 10.