American digital gambling giant DraftKings (DKNG) expects the Canadian online sports betting and iGaming markets will generate as much as US$8 billion in combined revenue, as legislation to legalize the industry advances in Ottawa.
The Boston-based company is among the largest players in the rapidly-expanding online gambling industry expanding to a growing number of states while keeping an eye on opportunities north of the border.
Speaking at the DraftKings investor day, chief executive officer Jason Robins said Canada was not really a focus for the company at this time last year. However, political support for Bill C-218 and favourable language in Ontario’s latest budget has changed that in recent months.
“Canada has been an exciting new development over the past year,” Robins said at Tuesday’s online event. “Were Ontario to be a U.S. state, it would be a top 10 state for us.”
A recent study by Deloitte Canada called for Canadians to eventually place as much as $28 billion per year in bets. DraftKings said the total addressable market in Canada is between US$5 billion and $8billion. The company expects 64 per cent of the Canadian population will eventually have access to legal online sports betting and iGaming, once provinces gain the authority to regulate the industry. It currently anticipates between 10 and 20 per cent market share in Canada.
“DraftKings will not have the early-mover advantage"DraftKings CEO Jason Robins
“The reason for this is there have been grey market operators for quite some time in Canada,” Robins said. “DraftKings will not have the early-mover advantage that we’ve had in other states.”
Anticipation for new forms of legal betting, especially wagering on individual sports games, has boosted the shares of a number of Canadian companies in the sector. It’s also fuelled speculation that larger American rivals will snap up Canadian assets ahead of legalization.
Earlier this month, Business Insider reported that DraftKings may be about to make a big acquisition, and that Toronto-based Score Media and Gaming (SCR.TO) is on the company’s list of potential targets. The news website cited information from unnamed industry insiders familiar with the company’s plans.
Robins addressed the issue of M&A during Tuesday’s event. He said while international expansion and media acquisitions “may be of interest,” the company does not need to do any deals at this time.
“Right now, we feel like there is nothing that we need,” he said. “A lot of what remains is what’s interesting out there that might be an opportunity. There is a lot of build versus buy analysis. It’s more opportunistic than anything else. And if we see good opportunities emerge, we’re going to go after them. But we’re also going to stay very disciplined, and only do deals if they’re the right ones.”
Placing bets through Canadian television?
U.S. television provider DISH Network (DISH) announced a deal with DraftKings on March 3 to let DISH subscribers view odds and place bets through their TVs. Robins said on Tuesday that he hopes this type of relationship can be replicated with other providers.
Last week, Yahoo Finance Canada asked Canadian telecom and media giants Rogers Communications (RCI-B.TO) and BCE (BCE.TO) if they would consider integrating sports betting and other gambling applications with their services.
"I can tell you that we are always considering ways to reach new audiences and deliver content," said Andrew Garas, Rogers Communications' director of media relations.
A spokesperson for Rogers’ sports and media arm said the company “supports the continued efforts to legalize single-game sports betting in Canada and looks forward to creating exciting and innovative new ways to engage fans with iGaming opportunities.”
A spokesperson for Bell said the company has “no announcements to make on that front.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.