Ontario sports betting: DraftKings says it'll enter the market this year

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Jason Robins, CEO of DraftKings, reacts after the company's initial public offering (IPO) listing, outside the Nasdaq MarketSite, in New York City, U.S., June 11, 2021. REUTERS/Shannon Stapleton
Jason Robins, CEO of DraftKings, reacts after the company's initial public offering (IPO) listing, outside the Nasdaq MarketSite, in New York City, U.S., June 11, 2021. REUTERS/Shannon Stapleton

DraftKings (DKNG) has announced plans to launch in Ontario in the second quarter of 2022, ending speculation about when one of the best-known brands in the sports betting industry would enter the much-anticipated market that opened up to competition in April.

The Boston-based online sports betting, daily fantasy and iGaming giant included the update in its latest financial filings on Friday. Until now, the company's absence in Ontario was widely noted, as rivals like FanDuel and BetMGM worked through the province's regulatory process.

"Ontario represents about 40 per cent of Canada's population, and Ontario would be the fifth-largest U.S. state by population if it were in the U.S.," CEO Jason Robins told analysts on a post-earnings conference call on Friday.

DraftKings operates a sportsbook in 18 U.S. jurisdictions, collectively representing 36 per cent of the American population, according to the company.

In February 2021, Robins expressed excitement about legislation that paved the way for the legalization of single sports gambling in Canada. Ontario opened its legal sports betting market to private companies on April 4. Since then, more than a dozen operators have begun taking bets in the province.

On Friday, Robins suggested that his company's later arrival in Ontario will not pose a challenge, noting that Ontarians have had access to offshore and grey market sports betting websites for many years.

"We do not believe that the timing of our launch will have any impact on the share we are able to achieve in that province," he said on the call.

DraftKings raised its revenue and earnings expectations for the year as it reported first-quarter financial results on Friday. Nasdaq-listed shares dipped 4.57 per cent to $13.78 as at 12:04 p.m. ET.

The company says it expects its Ontario launch, combined with its all-stock acquisition of Golden Nugget Online Gaming, to generate between US$130 million and US$150 million in additional revenue in fiscal 2022.

In a report released in April, Vixio GamblingCompliance estimated Ontario's online gambling market will be worth $1.6 billion this year. The industry consulting firm forecasts $3.27 billion in gross revenue in 2026.

Morgan Stanley noted the absence of DraftKings in Ontario last month, in its analysis of betting app downloads in the province since the market opened. Unlike Robins, the U.S. investment bank touted the importance of entering markets early.

"Given that not all major U.S. operators are live in the Ontario market yet, for example DraftKings (DKNG), we expect to see further dispersion of share over the coming months," analyst Thomas Allen wrote in a note to clients.

"However, taking first-mover advantage and getting customers on apps early has proven a successful strategy in most U.S. markets so far."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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