What Is DraftKings, And How Does It Work?

It’s no surprise that even our beloved pastimes have undergone a digital transformation in a world constantly buzzing with technological innovations and fast-paced advancements. One such evolution that has taken the world of sports and entertainment by storm is DraftKings, a name that has become synonymous with the exhilarating realm of daily fantasy sports. It doesn’t matter if you’re a die-hard sports bettor or someone who enjoys the thrill of competition; understanding what DraftKings is and how it works is a journey worth embarking on.

Imagine a place where your sports knowledge, intuition, and strategic prowess can translate into cheers from the sidelines and real-world winnings that could change the game for you. DraftKings has not only unlocked this fascinating dimension of sports engagement but has redefined the way millions of fans connect with their favourite teams and athletes. In this blog post, we’ll delve into the heart of DraftKings, unveiling the mechanics behind this exciting platform and its endless possibilities.


What Is DraftKings, And How Does It Work?

If you’ve ever wondered how a simple passion for sports can lead to a thrilling adventure filled with strategy, competition, and the chance to win big, you’re in for a captivating ride. Welcome to the world of DraftKings, where the line between being a fan and being a player blurs and where every match, every point, and every decision holds the promise of glory.

What is DraftKings Sportsbook?

DraftKings Sportsbook is an online platform that lets users bet on different sports events, including but not restricted to football, basketball, baseball, and more. It offers an engaging and interactive sports betting experience, where users can place bets on games and potentially win real money

Unlike traditional sports betting, DraftKings adds an extra layer of excitement through its daily fantasy sports contests.

How Does DraftKings Work?

Here is how DraftKings work

Setting the Stage

DraftKings is not your average fantasy sports platform; it’s an immersive, competitive, and advantageous experience that allows you to be more than just a spectator. It empowers you to step into the shoes of a general manager, assembling your dream team of athletes from various sports leagues. Whether basketball, football, baseball, hockey, or even niche sports like mixed martial arts and golf, DraftKings covers a broad spectrum of options, making it the ultimate destination for sports enthusiasts.

Drafting Your Dream Team

At the core of DraftKings lies the exciting process of drafting your fantasy team. You’re given a virtual budget, and it’s your job to carefully select athletes who you believe will perform exceptionally well in their upcoming real-world games. Each player comes with a price tag, and your challenge is to create the most competitive team possible while staying within your budget constraints.

But here’s where the strategy truly shines – you’re not limited to selecting the same players that everyone else is choosing. You’re competing against other users, so you must make strategic decisions to set your team apart. It’s a thrilling puzzle where you must evaluate player performance, team dynamics, injury reports, and more to create a winning lineup.

Scoring and Real-world Performance

Once the games kick off in real life, the excitement on DraftKings doesn’t stop. Your drafted athletes earn points based on their performance in their respective games. Points are awarded for actions such as touchdowns, home runs, assists, and more, while deductions can occur for turnovers, fouls, and other negative plays. Your team’s total score reflects how well your chosen athletes perform in reality, turning every real-world match into a nail-biting affair, even if you’re not on the field or court yourself.

Leagues and Contests

DraftKings offers various contest types, from head-to-head matchups against a single opponent to large-scale tournaments with thousands of participants. The diversity of contest options ensures a game for every player level, from beginners to seasoned veterans. You can choose contests with different entry fees, prize pools, and formats, allowing you to tailor your experience to your preferences.

Real Money and Prizes

One of the most enticing aspects of DraftKings is the opportunity to win real money and fantastic prizes. Depending on the contest you enter, you can compete for cash prizes, tickets to exclusive events, or even once-in-a-lifetime experiences. DraftKings has transformed how fans interact with their favorite sports, allowing them to revel in the action and benefit financially from their sports knowledge.

What Type of Gambling is DraftKings?

DraftKings primarily operates in daily fantasy sports (DFS), a distinct form of online gaming and entertainment. DFS is a game of skill rather than traditional gambling or sports betting. Here’s an overview of the key differences:

  1. Skill vs. Chance: In traditional gambling and sports betting, chance or luck often determines the outcome. For example, when betting on the outcome of a single game or a roll of the dice, your success is mainly out of your control. In contrast, DFS involves skill and knowledge, as players must research and make informed decisions when drafting their fantasy teams.
  2. Player Involvement: In DFS, participants actively create their fantasy teams, making strategic choices about which real-life athletes to include based on their predictions about how those athletes will perform in upcoming games. The results depend on the performance of these athletes in real-world sports events.
  3. Scoring and Research: DFS participants must have a good understanding of the sports they’re playing, knowledge of player statistics, and the ability to analyze data to make informed choices. Success in DFS results from making sound decisions, not just luck.
  4. Duration: Traditional gambling often involves single wagers on the outcome of a specific event (e.g., a game, a race), while DFS contests usually span an entire season, several games, or a single day’s matches. DFS offers an ongoing and immersive experience for participants.
  5. Legal Distinction: DFS is treated differently from traditional sports betting and gambling in many jurisdictions. DFS has been grouped as a game of skill in numerous legal rulings, while sports betting and casino gambling are often subject to different regulatory frameworks.

However, it’s essential to note that the legal classification of DFS can vary from one jurisdiction to another, and the regulatory landscape may change over time. Some places may classify DFS as gambling or subject it to specific regulations.

DraftKings also offers sports betting services in states where sports betting is legal. In this aspect, it operates as a sportsbook, allowing users to place wagers on the outcomes of sporting events. Sports betting is more akin to traditional gambling as it involves predicting the results of specific games and outcomes based on odds and chance. However, a good understanding of the sports and the ability to make informed bets can still influence the outcome.

Who Owns DraftKings?

DraftKings is a publicly traded company, so its shareholders own it. The largest shareholders of DraftKings are institutional investors, such as The Vanguard Group, Inc. and Nikko Asset Management Co., Ltd. These investors own billions of DraftKings stock shares, giving them a significant say in running the company.

How DraftKings is Governed

DraftKings is a publicly traded company on the Nasdaq stock exchange under the DKNG ticker. As a publicly traded company, DraftKings is subject to many governance rules and regulations. These rules and regulations are designed to secure the desires of shareholders and ensure that the company is managed responsibly and ethically.

The Board of Directors

The highest governing body of DraftKings is the Board of Directors. The Board is responsible for setting the company’s overall direction, approving significant decisions, and ensuring that the company operates with all applicable laws and regulations. The Board comprises a group of experienced and independent directors the shareholders elect.

The Audit Committee

The Audit Committee is a subboard of the Board of Directors responsible for overseeing the company’s financial reporting and internal controls. The Audit Committee comprises independent directors with expertise in accounting and finance. The Audit Committee’s responsibilities include:

  • Approving the company’s external auditor
  • Reviewing and supporting the company’s financial statements
  • Overseeing the company’s internal control processes
  • Investigating any allegations of financial misconduct

The Compensation Committee

The Compensation Committee is a subcommittee of the Board of Directors responsible for determining the CEO’s compensation and that of other senior executives. The Compensation Committee comprises independent directors with expertise in compensation matters. The Compensation Committee’s responsibilities include:

  • Developing and approving a compensation policy for the CEO and other senior executives
  • Evaluating the CEO’s performance and recommending the CEO’s compensation
  • Reviewing and agreeing or accepting the compensation of other senior executives

Other Governance Mechanisms

In addition to the Board of Directors and its subcommittees, DraftKings has many other governance mechanisms to ensure the company is managed responsibly and ethically. These mechanisms include:

  • A whistleblower hotline that employees can use to report suspected wrongdoing
  • A code of ethics that outlines the industry’s expectations of employees
  • A compliance program that is designed to help the company flow with all applicable rules and regulations

Is DraftKings Legal Gambling?

The legality of DraftKings and similar daily fantasy sports (DFS) platforms varies by jurisdiction. In many parts of the United States, DFS is considered legal, but it’s important to note that the regulatory landscape for DFS can change and may differ from one state to another. Here are some key points to consider:

  1. Legal Status by State: In the United States, the legality of DFS is determined at the state level. Some states have explicitly legalized and regulated DFS, while others have declared it illegal or have not addressed its legal status.
  2. Skill vs. Chance: DFS is often classified as a game of skill rather than gambling due to the role of skill and knowledge involved in selecting fantasy sports teams. This distinction has contributed to its legal status in some jurisdictions.
  3. Regulation: In states where DFS is legal, operators like DraftKings are typically required to obtain licenses and adhere to specific regulations designed to protect consumers and ensure fair play.
  4. Taxation: States that permit DFS may impose taxes on the revenue generated by operators, which can contribute to state revenue.
  5. Consumer Age Restrictions: Just like traditional gambling, DFS platforms often have age restrictions, allowing only individuals who are 18 or 21 years of age, depending on the state, to participate.

It’s crucial to check the specific laws and regulations in your state or jurisdiction to determine the legality of DraftKings. Regulations and legal opinions can evolve, so it’s advisable to consult with legal sources or government authorities for the most current information regarding DFS and online gaming in your area.

Outside of the United States, the legal status of DFS varies from country to country. In some regions, DFS may be regulated and legal; in others, it may be considered gambling and subject to specific regulations. If you are not in the United States, it’s essential to research the local laws and regulations that apply to online gaming and DFS in your location.

What States is DraftKings Illegal?

The legality of DraftKings varies by state. While it is legal and operational in many states, some states have banned daily fantasy sports and online sports betting. 

DraftKings is illegal in the following U.S. states and territories:

  • Alabama
  • Arizona
  • Arkansas
  • Connecticut
  • Delaware
  • District of Columbia
  • Hawai’i
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Massachusetts
  • Michigan
  • Mississippi
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

How Does DraftKings Make Money?

DraftKings generates revenue through several channels and business strategies. Here are some of the primary ways in which DraftKings makes money:

  1. Entry Fees: DraftKings charges participants an entry fee to join daily fantasy sports (DFS) contests. The entry fees can vary widely, from free contests to high-stakes tournaments with significant buy-ins.
  2. Rake: DraftKings retains some of the entry fees collected as a commission, often called a “rake.” The rake represents the company’s share of the contest prize pools. The exact percentage can vary according to the contest type and size.
  3. Contest Offerings: DraftKings offers a wide range of DFS contests with different entry fees, prize pools, and formats. Diversifying their contest offerings attracts a broad spectrum of participants, each contributing to the company’s revenue.
  4. Freemium and Premium Services: DraftKings provides both free and premium services. While many contests are accessible with entry fees, the company offers premium features and content, often requiring subscription fees or additional purchases. These excellent services can include access to enhanced statistics, research tools, and exclusive content.
  5. Advertising and Partnerships: DraftKings partners with sports leagues, teams, and media companies for promotional and advertising opportunities. They also engage in marketing agreements and sponsorships to increase their brand visibility. These partnerships often involve financial arrangements that contribute to their revenue.
  6. Sports Betting: In states where sports wagering is legalised, DraftKings operates as a sportsbook, allowing users to place bets on the outcomes of different sporting events. They generate revenue through the margins on sports bets, similar to traditional sportsbooks.
  7. Data and Content Sales: DraftKings may monetize their extensive data and content resources by selling sports-related data and analysis to third parties, including media outlets, researchers, and businesses looking for sports-related insights.
  8. Licensing and Partnerships: DraftKings may enter into licensing agreements to expand their services into new markets or partner with casinos, enabling them to offer their services through physical casino locations.
  9. Cross-Promotion: DraftKings may cross-promote various aspects of their business, such as DFS, sports betting, and casino games, to attract users from one platform to another and generate more revenue.
  10. In-game purchases: In addition to entry fees, DraftKings may offer in-game purchases or virtual goods for users, which can provide an additional source of revenue.
  11. Geographical Expansion: By expanding into new states and markets where DFS and sports betting are legal, DraftKings can tap into a more extensive customer base and generate more revenue.

It’s important to note that DraftKings operates in a dynamic regulatory environment, and the legal status of its services can vary by jurisdiction. Their revenue sources can also evolve as they adapt to changing market conditions and explore new business opportunities.

How Does DraftKings Pay You?

DraftKings provides multiple methods for withdrawing your winnings, including bank transfers, PayPal, and checks. You can select the withdrawal method that is most convenient for you, but keep in mind that withdrawal processing times may vary.

Can You Become a Millionaire on DraftKings?

While winning significant amounts of money on DraftKings is possible, becoming a millionaire solely through the platform is challenging. Winning large prizes often requires a combination of skill, strategy, and a bit of luck. 

However, some users have succeeded remarkably by consistently making informed picks and participating in high-stakes contests.

How Much Tax Do You Pay on DraftKings Winnings?

The tax implications of your DraftKings winnings can vary depending on several factors, including your total annual income, the specific tax laws in your jurisdiction, and the type of game you’re playing (daily fantasy sports or sports betting). Here are some general guidelines:

  1. Federal Income Tax (United States): In the United States, all gambling winnings, including those from DraftKings, are considered taxable income. This includes both daily fantasy sports and sports betting winnings. DraftKings may provide you with a tax form (such as a 1099-MISC or W-2G) if your net winnings meet or exceed a certain threshold. You are required to report your gambling income on your federal income tax return.
  2. State Income Tax (United States): Added to federal income tax, you may be subject to state income tax on your DraftKings winnings. The specific tax rate and rules can vary widely by state. Some states do not impose an income tax, while others have tax rates and rules for gambling income.
  3. Losses Deductions: In the United States, you can typically deduct gambling losses up to the amount of your gambling winnings if you itemize your deductions on your federal tax return. If you had losses on DraftKings, you may be able to lessen your overall taxable income by reporting these losses.
  4. Professional Gambler Status: If you consistently earn a substantial portion of your income through gambling, including DFS or sports betting, you may be considered a professional gambler. In this case, you’ll have additional tax considerations, including self-employment tax for the income derived from gambling.
  5. Foreign Taxation: If you’re located outside the United States, your tax obligations will depend on the tax laws of your home country. Some countries tax gambling winnings, while others do not. It’s essential to consult with a tax professional or research your local tax regulations to understand the requirements.
  6. Tax Reporting: Remember that it’s crucial to maintain accurate records of your DraftKings transactions, including entry fees, winnings, and losses. This documentation is essential for reporting your income accurately and claiming any deductions.

To ensure adherence to tax rules and regulations, consult a qualified tax professional or accountant who can offer guidance tailored to your financial situation and jurisdiction. Tax laws can be complicated and subject to change, so seeking professional advice is the best way to navigate the tax implications of your DraftKings winnings.


DraftKings is a popular online platform that combines the excitement of sports betting with the strategy of daily fantasy sports. Its legality and potential for winning big vary by location and user skill. Before you dive into the world of DraftKings, be sure to check the legal status in your state and gamble responsibly. 

Good luck, and may your DraftKings experience be both enjoyable and rewarding!


Q1: Is DraftKings available in my state? 

A1: DraftKings availability varies by state. Check the DraftKings website or consult local authorities to determine whether it’s legal in your location.

Q2: What is the minimum age to use DraftKings? 

A2: The minimum age to use DraftKings is typically 18 or 21, depending on your state’s regulations.

Q3: Can I play DraftKings on my mobile device? 

A3: Yes, DraftKings offers mobile apps for both iOS and Android devices.

Q4: Are there responsible gambling features on DraftKings? 

A4: Yes, DraftKings provides reliable gambling tools like deposit limits, self-exclusion options, and resources for seeking help with gambling problems.


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