The Missouri Gaming Commission awarded two coveted sports betting licenses to DraftKings and Circa Sports on Friday.
It's a move that some keen observers of the gaming industry say is a major surprise, especially considering sports betting giant FanDuel was also making a play for what's known as the "untethered" license.
"To put this in terms that I think most Missourians could understand, it's kind of like the 2019 St. Louis Blues winning the Stanley Cup," said Steve Bittenbender, a writer and analyst for betmissouri.com. "This really came from out of nowhere."
Missourians legalized sports betting last year. And that constitutional amendment gives the Missouri Gaming Commission power to give two licenses to sports betting operators that don't have an agreement with a casino or sports team.
Commissioners picked DraftKings and Circa Sports on Friday, while FanDuel failed to make the cut.
Ryan Butler, a senior analyst at covers.com, said the move was a "huge surprise" since FanDuel is considered a much bigger player in the sports betting arena.
"DraftKings and FanDuel absolutely had a bigger reputation," Butler said. "They've advertised across the country. They've spent literally billions on their product and marketing and all this stuff with it. And Circa Sports is a much smaller, I'd almost say, niche type sports book."
Missouri Gaming Commission executive director Michael Leara said that commissioners liked how Circa Sports catered to larger bettors. DraftKings and FanDuel tend to market themselves to avid sports watchers, as opposed to people who bet more money regularly.
"They saw it as an opportunity to attract different types of bettors to the state, for example, higher wagering," Leara said. "And that seemed to be appealing to the commissioners. Instead of having two of the exact same type of business models and betting platforms, having something a little bit different would be attractive to the people of the state."
In a statement, Circa Sports CEO Derek Stevens said "We came in as the long shot against national giants like DraftKings and FanDuel, but our licensure approval today proves there's room for a different kind of operator." "We didn't win by trying to be the biggest," Stevens said. "We won by staying true to who we are."
An unusual system
Both Butler and Bittenbender said Missouri is unusual compared to other states that offer sports betting. Most states require an agreement with a casino or a sports team to operate, which often costs millions of dollars for the betting service.
Missouri's sports betting amendment does provide the option for FanDuel to partner with a casino or sports team and launch a mobile application throughout the state. Other popular sports betting operators, such as BetMGM, are planning to take a similar approach before sports betting begins in earnest on Dec. 1.
"For the Missouri sports bettor who wants to bet, it does not matter if it's tethered or untethered. He or she is not going to know the difference," Butler said. "This is entirely just from the financial perspective of it. So FanDuel is going to find a tethered partner. They will then be able to launch a mobile app that you can still use anywhere in the state."
In fact, on the same day the Missouri Gaming Commission made its decision on the two tethered licenses, FanDuel announced a partnership with St. Louis City SC.
"Missouri is home to some of the most passionate sports fans in the country, and we are thrilled to partner with St. Louis CITY SC to introduce our industry leading product to the Show Me State," said Mike Raffensperger, President, Sports at FanDuel, in a statement. "We look forward to supporting the team and engaging with the community as we bring America's #1 Sportsbook to fans across Missouri."
To be sure, Circa Sports is not necessarily a tiny player in the sports betting arena. The sportsbook area at Circa's Las Vegas resort is one of the largest in the world, with a capacity of roughly a thousand people.
But Bittenbender said it was notable that commissioners picked Circa Sports, even though they may not provide as much money directly to the state. They're considered what's known as a "low hold" operator that ends up giving a larger percentage of money back to people making bets.
"They're not going to produce the tax revenue that FanDuel and DraftKings will," Bittenbender. "But by bringing in these new customers, and by bringing in these high-dollar bets, even if those bets win and the gaming commission doesn't see the tax revenue from it, those winnings will go back to someone based in Missouri. And that money is going to be spent or invested somehow in the state."
Given that FanDuel spent millions of dollars to help pass sports betting in Missouri, Butler said the fact that it didn't get the attractive license is noteworthy.
"It's a largely symbolic victory. It saves them a few million dollars," Butler said. "But the little guy took down the big guy. And as someone who spends all day in the industry, there's a lot of just congratulations and excitement for the little guy."
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