February 15th, 2017
DraftKings' continued push into Europe took another step forward recently with the news that it has been granted a "skill game" licence by the Malta Gaming Authority (MGA). Following on from the MGA's decision to define skill-based betting as separate from other betting activities, DraftKings has been handed the first official Daily Fantasy Sports (DFS) licence from the regulator and, with it, access to a host of European countries.
News of the new licence broke at the close of January, which was just under a year after DFS first went live in the UK. Having already established itself in the US market alongside FanDuel, DraftKings filed a licence application under "gambling operations" and "pool betting" in June 2015.
After reviewing the application, the UK Gambling Commission (UKGC) granted the DFS operator a UK gambling licence. With a new licence in place, DraftKings UK was able to link up with the US and Canadian platforms, but it still maintained a desire to become active in more European countries.
With a licence from the respected UKGC in place, DraftKings Chief International Officer Jeffrey Haas moved to acquire an MGA licence in 2016. A period of review followed and official confirmation of the licence was published on January 30, 2016.
After identifying a need to re-classify certain games due to the amount of skill present in them, the MGA published the Digital Games of Skill with Prize Position Paper in December 2015. Setting out the guidelines for what would become the 'Malta Skill Games Licence', the paper concluded that games in which "skill plays a more predominant role than chance" shouldn't be classified as gambling in the same way.
To further distinguish between games of skill, the MGA created a sliding scale of oversight. At one end, games where there is very little scope for chance to influence the result would require no oversight. At the other, games where there is still an element of luck involved would require some oversight from the MGA.
Daily Fantasy Games and Sports were placed more towards the latter position, which means DraftKings will be "subject to additional regulatory supervision" to ensure the safety of customers is kept intact. As part of its licensing conditions, DraftKings will have to provide regular reports to the MGA on top of paying a 5% tax on its gross gaming revenue.
With its controlled skill games licence now approved, DraftKings is not only permitted to offer DFS betting in Malta, but any European Union (EU) country that hasn't explicitly ruled that DFS is gambling. At this stage, it's important to stress that the MGA skill game licence only provides a legal basis for DraftKings' right to offer its services in an EU country.
Indeed, under EU law there must be a free market for goods and services. Based on this and assuming a country hasn't specifically excluded DFS betting, there should be no impediment for any DFS operator with an MGA licence. Naturally, if an EU country later rules that DFS is gambling, then this could force DraftKings to either withdraw from that region or challenge the ruling in court.
For now, however, DraftKings is free to expand its operation across the EU and, according to Haas, its first port of call is Germany. With a population of 80 million and one of the most buoyant iGaming markets in the world, Germany should prove highly lucrative for the operator.
However, as Haas has also stated, Germany will be one of many countries DraftKings will be venturing into over the coming months. In fact, in commenting on his plans before the MGA awarded DraftKings a licence, Haas believes the EU has a potential customer base of 100 million.
If this proves to be true, DraftKings would become by far the largest DFS operator in the European gambling market and, potentially, the world. Indeed, it may then be possible for the operator to link its European sites to its US assets. For example, in states like New York, DraftKings met the regulation requirements and was granted a licence to operate as it was deemed a game of skill [here's a map of DFS regulation state-by-state].
With Malta offering a similar verdict, there may be no reason why both regulatory bodies wouldn't sanction a playerpool sharing agreement. If this were to happen, it would not only benefit DraftKings as an operator, but also European customers who want access to more sports and, importantly, prize money.
Whether you're in the States where the DFS boom began or across the pond in Europe where the betting market is growing rapidly, players can visit DraftKings today and receive a generous sign up bonus to ensure their transition into the world of DFS is as smooth and successful as possible!