DraftKings and FanDuel officially launched online and mobile sports betting in Arkansas on Friday, weeks after they were each granted a license by the Arkansas Racing Commission (ARC).
Through a partnership with Southland Casino Hotel, DraftKings Sportsbook is now available across the Natural State, which becomes the 30th U.S. state in which DraftKings offers state-regulated sports betting. FanDuel confirmed that it is also now live in Arkansas, its 26th sports betting state, via its own partnership with Oaklawn Casino.
For the two U.S. sports betting leaders, it is a second state launch in four months after they went live on day one of the Missouri sports betting market on Dec. 1. DraftKings also launched territory-wide online wagering in Puerto Rico in February.
Both DraftKings and FanDuel were approved last month to bring mobile sports betting to Arkansas when they were awarded vendor licenses by the ARC in late February. They are now live in the state early enough to capitalize on March Madness, as the Arkansas Razorbacks prepare to face High Point in their Round of 32 matchup on Saturday night.
DraftKings and FanDuel bring brand-name power
Arkansas authorized online sports betting in 2022 with rules that require online sportsbooks to partner with a land-based casino and pay 51% of their sports betting revenue to the casino partner. DraftKings and FanDuel previously voiced a position that the revenue-sharing model did not work for them and was not worth entering Arkansas.
The gaming giants will operate in Arkansas as vendors supplying sports betting technology and data to each casino, but the casinos themselves will remain in operational control of the platforms.
Southland and Oaklawn previously offered statewide sports betting via Betly Sportsbook and an in-house Kambi-powered Oaklawn Sports platform, respectively. A spokesperson for the Arkansas Department of Finance and Administration told local media that DraftKings and FanDuel becoming available in Arkansas is “a game-changer” that could turn millions of dollars of revenue into billions.
While they have not yet offered statewide sports betting in Arkansas, DraftKings and FanDuel both already have a presence in Arkansas as DraftKings Predictions and FanDuel Predicts are both available in the state. As of the time of writing, both operators’ websites specify that they only offer financial and economic event contract markets in Arkansas, not sports contracts.
Will promo deductions rule limit Arkansas?
During the process of considering DraftKings and FanDuel for licenses, the in-state Saracen Casino Resort, which operates its in-house BetSaracen sportsbook without a partner, voiced concerns over the plan.
The casino’s Chief Marketing Officer Carlton Saffa told the ARC that the two gaming giants should be denied licenses for multiple reasons, including their lobbying against a now-approved tribal-tethered model in Wisconsin, and the fact that the ARC’s model does not cap promotional deductions and free play.
Saffa also pointed to Missouri, which launched online sports betting with similar promotional deduction rules. There, DraftKings and FanDuel accounted for almost three-quarters of the $928m in total handle in December and January combined, a wagering volume that was significantly inflated by the vast amount of free bets they offered. The pair reported $54.4m and $65.6m in respective winnings from that handle, but did not pay any tax as they carried losses from December’s promotional handouts forward into January.
Amid that context, Missouri Rep. Jeff Knight introduced legislation a few weeks ago to hike Missouri’s sports betting tax rate from 10% to 24% and charge that new rate on operators’ revenue before accounting for free bets or promotional credits, rather than after those have been deducted.
The Arkansas Department of Finance and Administration spokesperson acknowledged to local media that the agency and the ARC will be keeping an eye on the revenue that DraftKings and FanDuel produce in Arkansas. “You would expect that tax revenue would increase along with that. So, if it doesn’t, then that’s going to be something we’re watching closely, and the [Racing] Commission is going to be watching closely.”
