DraftKings’ Acquisition Of Microbetting Specialist Simplebet Was Long Time In Making

DraftKings announced on August 28 that it reached an agreement to acquire micro-betting supplier/specialist Simplebet, and though DraftKings did not disclose the financial terms, some of those figures have leaked out. iGaming Alliance reported that JMP Securities estimated the deal could be worth up to $195 million. Seventy million will reportedly be paid upfront and the remainder may be realized through earnout payments.

The acquisition, which had been under negotiation for some time, is a strategic move by DraftKings to enhance its in-play betting offerings and leverage advanced machine learning technology to engage users more effectively.

This acquisition marks DraftKings’ second major purchase in 2024, following its purchase of the digital lottery outfit Jackpocket in May for $750 million. Earlier this year, the company also acquired SportsIQ Analytics, a sports data firm, and divested itself of VSiN, a sports betting media network it acquired in 2020, by selling it back to its original owners.

Given that DraftKings already accounts for approximately 60% of Simplebet’s turnover, the integration of Simplebet’s technology could further solidify DraftKings’ position as a leader in the U.S. sports betting market. In addition, by bolstering its in-play betting capabilities through the Simplebet acquisition, DraftKings is well-positioned to meet the growing demand for more interactive and immediate betting experiences.

The partnership between DraftKings and Simplebet was pretty well entrenched leading up to this point; DraftKings Sportsbook began offering microbetting markets powered by Simplebet beginning in 2021. This acquisition will now enable DraftKings to integrate Simplebet’s machine learning models directly into its platform, allowing the company to offer even more accurate and timely betting opportunities throughout a game. This integration is expected to reduce customer friction by providing faster wagering options and improving overall user experience.

Expanding microbetting capabilities

Simplebet, founded in 2018, specializes in providing micro-market pricing for major sports leagues, including the NFL, MLB, NBA, NHL, and NCAA basketball and football. Microbetting, which focuses on wagers that are resolved quickly during live games, has become an increasingly popular way to engage sports fans.

For instance, bettors can place wagers on the outcome of the next pitch in a baseball game or the result of the next at-bat. This type of in-game wagering is designed to offer immediate gratification, a feature that has proven attractive to sports fans seeking more interactive experiences.

Simplebet’s machine learning algorithms are designed to analyze historical data and predict outcomes with high accuracy, such as determining the probability of specific events occurring within a game. This capability allows sports betting operators to offer a wide array of microbetting markets that can be settled almost instantaneously. Simplebet claims its system can process transactions in just 250 milliseconds.

The company’s technology has already been utilized by several major sports betting platforms, including bet365, Caesars Sportsbook, and Hard Rock Bet. It is not yet clear how DraftKings’ purchase of Simplebet will affect these operators. DraftKings hasn’t stated if it will continue to license the technology to them.

However, it seems more likely that DraftKings will keep tight control of Simplebet’s capabilities, and may leave its sportsbook competitors scrambling to find a replacement. Two other microbetting technology suppliers in the space that may be receiving a few phone calls today are Kero Sports and nVenue.

The growing popularity of in-play betting

In-play betting, particularly microbetting, is rapidly gaining traction in the U.S., a market that has traditionally lagged behind Europe in this regard. However, the gap appears to be closing.

For example, sports data and technology company Genius Sports reported a 60% increase in live betting from its NFL-partnered sportsbooks in its most recent quarter compared to the same period in 2023. This surge in live betting underscores the growing appetite for real-time wagering options among U.S. sports fans.

DraftKings’ acquisition of Simplebet positions the company to capitalize on this trend by offering more dynamic and engaging betting options. The ability to provide a diverse array of microbetting markets throughout a game is expected to keep consumers engaged for longer periods, even during less competitive matchups.

By acquiring Simplebet, DraftKings is bringing another crucial part of its technology stack in-house. This is a significant advantage in the highly competitive sports betting industry, where companies strive to control as much of their technology as possible. Managing technology internally should allow for quicker resolution of technical issues, more customization, and the ability to innovate rapidly in response to market demands.