The Arkansas Racing and Gaming Commission has approved DraftKings and FanDuel to conduct online sports betting in the state. DraftKings will partner with Southland Casino in West Memphis and take over the property’s Betly sportsbook. FanDuel will partner with Oaklawn Racing Casino Resort.
The sports betting giants both promoted their availability ahead of the vote by the commission. There is a trend of national betting operators teaming up with local brick-and-mortar casinos to meet states’ legal requirements.
Unusual sports betting regulatory structure in Arkansas
Arkansas legalized sports betting at live casinos in 2019 and then added mobile and online betting in 2022. Arkansas residents will soon be able to enjoy betting online on various sports through DraftKings and FanDuel.
Arkansas was the only state with mobile wagering that didn’t have any national operators in its market. The reason for this was its tax structure. National brands had to pay more than 51% of revenue to the state, one of the highest rates in the country.
Casinos make new agreements
The Southland and Oaklawn casinos recently made new agreements so the two national operators will not act as third-party operators. They will be platform providers for the casinos. This means they don’t have to pay the 51% tax.
The general manager of Oaklawn Casino, Wayne Smith, believes the partnership with FanDuel will bring in five times more online sports betting revenue than the casino’s current platform. Both FanDuel and DraftKings have about 33% of the nationwide casino market share.
DraftKings Executive Vice President Gregory Karamitis says the sportsbook aims to be active in time for March Madness.
Opposition to national operators
The state’s third mobile sportsbook pleaded with regulators not to allow the two national operators to enter. Bet Saracen is the current highest-grossing sportsbook in the state. It will be difficult for it to compete with the two large operators.
Chief Marketing Officer of Saracen Casino Resort, Carlton Saffa, says it has chosen to keep its in-house platform rather than partner with a national brand. The casino is proud of the reputation it has built with its current platform and has no plans to change it, though this could make it harder to stay competitive.
Saffa said that the two large sportsbooks could corner the market with their promotions and then reduce their tax liabilities by deducting free bets and other promotions. He raised concerns about whether tax revenues would really grow alongside the betting handle.
In other states, promotional deductions have reduced expected returns. Saffa said the sportsbook has a system that is working for Arkansas and one that other states could replicate. He believed that allowing the national operators in would break the system.
Saffa’s plea didn’t sway commission officials, who voted 7 to 0 in favor of welcoming the two national operators. The Arkansas Racing & Gaming Commission chairman, Alex Lieblong, responded that the commission has the authority to address any abuse of promotional deductions or free play bets.
Additions expected to boost sports betting handle in Arkansas
The per capita sports betting revenue in Arkansas was the lowest of any mobile sports betting jurisdiction. Locally branded sportsbooks couldn’t offer the product recognition or betting capabilities of the national operators. These operators use advanced display technology and other technological innovations. State officials expect the additions to boost the betting handle significantly, despite the opposition from Saracen over tax concerns and competition.
The U.S. now has 39 states, along with Washington D.C. and the American territory of Puerto Rico, that allow sports betting.
