DraftKings Paid $350M To Corner MMA Betting Market That’s Just 1% Of Total Handle

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Last week, Colorado-sanctioned sportsbook DraftKings inked a reported five-year deal worth $350 million with the UFC to become its exclusive marketing partner for sports betting. It makes DraftKings the unofficial home of UFC wagering, but of course DraftKings’ rivals will still offer wagering on the sport.

Colorado offers unusual transparency and releases handle data for MMA wagering, unlike other states. Typically, MMA is included in the so-called “other” category, which would include sports like tennis and golf. But Colorado regulators provide the public a more detailed breakdown.

Sports betting in the Centennial State kicked off in May 2020 during the early days of the COVID-19 pandemic. The UFC was actually the first U.S. sports organization to return to action, and it enjoyed some early success without a lot of competition. Fast forward to early 2021, and we have a better look at where MMA stacks up to other sports when the betting menu is full.

From May 2020 through January 2021, Colorado’s online/mobile sportsbooks handled $18,131,810 on MMA, which also includes the likes of UFC rivals such as Bellator. The UFC surely commands the vast majority of that MMA handle, but the precise percentage is unknown.

The books handled about $1.5 billion during that time frame. MMA wagering accounted for about 1% of the total handle. In January, the most recent month of betting data, MMA was 0.9%. MMA is very much a fringe betting sport. To its defense, it’s still a relatively young sport.

With the UFC deal, DraftKings is looking to capture as much of that 1% as it can.

Is the deal worth it?

Much of the problem for the UFC is that while it is a year-round sport in the sense that there’s no off season, most people wager on the fights the day of and before they begin. There’s very little in-fight wagering. Only 8% of UFC betting handle came from during the fights as recently as 2019. That should tick up over time, but obviously DraftKings and UFC are trying to expedite it. Right now, live wagering accounts for as much as half of the total betting handle in the nascent regulated U.S. market, and in Europe it’s even higher, according to SportsBusiness Journal.

The DraftKings-UFC deal wasn’t pitched to the public as a way to grow in-fight wagering, but that is assumed. DraftKings should have a major advantage over its competitors when it comes to live wagering. DraftKings’ odds will be listed on the broadcasts. Other books will still have licensing access to the UFC’s live data feed, so there doesn’t appear to be any exclusive technological enhancements for DraftKings.

To put it another way: Live betting on sports has been plagued to some extent by information delays, which leave some bettors feeling like they are at an unfair disadvantage to books. It doesn’t appear the live betting products for DraftKings’ rivals will be slowed down in any way as a method to funnel bettors to the UFC’s official sports betting partner.

That said, DraftKings will have in-fight betting promotions that should make its pricing and options more attractive to consumers looking to bet during the action.

As for the price tag of $350 million for the partnership … over the most recent quarters, DraftKings has spent about $200 million a quarter on “sales and marketing,” according to an earnings presentation from last month. The UFC partnership was expensive, but DraftKings is already spending a lot of money on marketing. The key for DraftKings will be growing the interest in in-fight wagering.

Brian served as a senior reporter and online content manager for Card Player Magazine for nearly a decade before joining USBets in October 2018. He is currently focused on legal and regulated sports betting and online gaming. He's an avid jiu-jitsu practitioner in his free time.

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