Tag: DFS

Betting roundup /

Layoffs at FanDuel the latest evidence of daily fantasy sports industry’s new reality

Bad news just keeps piling up on daily fantasy sports.

With an increasing number of attorneys general saying DFS contests are illegal gambling in their states, the industry is fighting for survival on the legal front. Meanwhile, the optics battle has seemingly already been lost, with numerous arbiters fawning over Tuesday night’s New York Times/Frontline piece that contained few revelations and less cohesion.

Some of this derision, the industry brought on itself. The advertising strategy was the PR equivalent of indiscriminate carpet bombing and anecdotally seems to have turned off at least as many prospective customers as it attracted.

And then there’s the industry’s ongoing insistence that it isn’t gambling—an understandable stance, given the United States’ archaic gambling laws, but not one that’s often going to pass the smell test under the close examination of impartial minds.

All of which is bound to affect the bottom line of the industry’s leading companies, FanDuel and DraftKings, and in the last two days, evidence is mounting that it already has.

On Tuesday, the Boston Globe reported that Twenty-First Century Fox had written down significantly its investment in DraftKings, from $160 million in July to about $65 million in a recent filing with the Securities and Exchange Commission.

Later in the same day, a story broke that the blockbuster marketing agreement between ESPN and DraftKings had been dissolved.

The deal, which epitomized DraftKings’ summer of 2015 swagger, had the company on the hook for a sum reportedly north of $200 million per year. While DraftKings is likely happy to have wriggled free of that commitment, it also represents how swiftly the company has fallen. Along with valuable and pervasive brand integration, the deal included exclusive advertising rights among DFS operators to ESPN’s platforms that could’ve solidified DraftKings’ status as industry leader.

Unspared from the carnage, FanDuel confirmed Wednesday that it will be laying off 55 employees from its Florida branch less than a year after it opened with the hiring of 38 former Zynga employees in May. The Orlando Sentinel reports that the local office will remain open with roughly 20 employees.

“We did have a group of developers in the Orlando office that were focused on (research and development) for ancillary games and applications that we will not be investing in moving forward,” FanDuel told the Sentinel via written statement.

In some ways, the tribulations at DraftKings and FanDuel aren’t unique among their cohorts. The Globe notes that numerous other tech startups have had their value marked down by investors recently, and USA Today reported last month that layoffs at similarly situated companies are on the rise.

Of course, unlike the DFS unicorns, most of those companies aren’t also saddled with an ever-sinking public perception and cascading questions regarding their legal right to do business.

But that doesn’t necessarily mean DFS is doomed. Industry-friendly legislation has been introduced in a growing number of states, and in some is speeding through the legislative process.

That sets the path toward a clearly legal, regulated future, and while six months ago that might have seemed like a consolation prize, at this point it seems more like a best-case scenario.

AROUND THE WEB

LOOK WHO’S TALKING

“Well, the fact is, we just don’t know what’s going on in there.”—New York Attorney General Eric Schneiderman on his office’s investigation into FanDuel and DraftKings

“The current model of extensive advertising and marketing budgets is probably no longer viable. The additional regulation and cost of regulatory compliance likely means the end of significant advertising and it may mean a reduction in future private investment in the industry.”—Gaming lawyer Jeffrey Ifrah on the current state of the daily fantasy industry

TWEETS OF NOTE

ODDS & ENDS

ODDSMAKER’S TAKE

“A lot of people are talking 10-1 or 100-1, but I would make it much lower. It’s a lot closer to happening than we once thought. I have the lowest odds on the Raiders being here. It should be less than 10-1.” —Jimmy Vaccaro, veteran oddsmaker at the South Point sports book on Las Vegas’ chances of landing an NFL team.

DFS industry /

Television news magazine shows set to take on daily fantasy sports Tuesday night

Apparently the screeners have been sent out for the “The Fantasy Sports Gamble,” a Frontline/New York Times investigative documentary set to air Tuesday night on PBS.

Expect moralizing. A review from Variety says the producers have “done yeoman’s work in shedding light on the unsavory nature” of DFS sites.

Also tonight, 60 Minutes Sports, which airs on Showtime, will take a look at DFS and sounds like it may include new and possibly damaging information.

The NY Post reports that the Showtime feature includes info that two “insiders” from DFS sites are working with state investigators, and that more legal action could be forthcoming.

“I don’t want to pre-judge anything,” the Post quotes state Attorney General Eric Schneiderman. “But information that has come forward has suggested that some of the representations they have made—appear to be false and misleading, designed to lure the small players in.”

The New York Times has released a preview of its piece, which appears to be mostly a retread of its already-published articles, including its investigation into online sports betting.

60 Minutes Sports airs at 8 p.m. Eastern on Showtime; Frontline airs at 10 p.m. on PBS.

DFS industry /

DraftKings issues cease-and-desist notice to daily fantasy sports content provider

DraftKings has issued a cease-and-desist letter to SuperLobby.com, a daily fantasy sports content provider based in the United Kingdom.

The letter, which representatives of SuperLobby posted on Twitter on Monday, alleges unauthorized use of DraftKings trademarks and content from the site.

SuperLobby displays contests from 10 of the most popular daily fantasy operators, including DraftKings and FanDuel, allowing vistors to search for tournaments by price point, overlay and rake margin, among other variables. It gained prominence over the course of the 2015 NFL season with its widely cited “Lowdown” report, which reported on the DFS sites’ weekly revenue figures.

DraftKings cease-and-desist letter alleges it did so by violating the site’s terms of use agreement and scraping data from its contests lobby.

The letter demands that by the close of business on Feb. 10, SuperLobby provide written assurances that it will immediately cease scraping data from DraftKings.

Thus far, SuperLobby hasn’t clearly indicated how it plans to respond.

Reaction from industry observers was mixed.

DFS /

DraftKings is now (mostly) live in the UK

DraftKings’ long-awaited launch in the United Kingdom has finally become a reality, albeit in a partial form.

Originally slated for an October launch, the leading daily fantasy site went live Friday, but is only fully reachable via mobile app. The desktop version is apparently still in the works, and currently, the UK site only allows players to register for the site.

Players in the UK have also reported that they are unable to fund accounts using credit or debit cards.   The DFS play itself is not expected to differ significantly from the version that’s available to players in North America. The company has indicated previously that liquidity will be pooled between its user bases, allowing all customers to compete against each other in common contests.  Reports that DraftKings had applied for the necessary gaming license in the UK originally surfaced in June, and the initial plan included an October launch date. It’s been pushed back several times since then, as recently as early this week, according to a report from CNBC. Stateside, DraftKings and industry co-leader FanDuel are at the forefront of the daily fantasy industry’s ongoing legal battles. Numerous state attorneys general have ruled DFS to be illegal gambling, prompting the companies to stop accepting players in some states, most recently Hawaii. Pivotal trials are expected to take place later in 2016 in New York and Illinois, and numerous states are considering legislation that would make DFS legal and introduce various levels of regulation.

DFS industry /

DraftKings is now (mostly) live in the UK

DraftKings’ long-awaited launch in the United Kingdom has finally become a reality, albeit in a partial form.

Originally slated for an October launch, the leading daily fantasy site went live Friday, but is only fully reachable via mobile app. The desktop version is apparently still in the works, and currently, the UK site only allows players to register for the site.

Players in the UK have also reported that they are unable to fund accounts using credit or debit cards.   The DFS play itself is not expected to differ significantly from the version that’s available to players in North America. The company has indicated previously that liquidity will be pooled between its user bases, allowing all customers to compete against each other in common contests. 

Reports that DraftKings had applied for the necessary gaming license in the UK originally surfaced in June, and the initial plan included an October launch date. It’s been pushed back several times since then, as recently as early this week, according to a report from CNBC.

Stateside, DraftKings and industry co-leader FanDuel are at the forefront of the daily fantasy industry’s ongoing legal battles. Numerous state attorneys general have ruled DFS to be illegal gambling, prompting the companies to stop accepting players in some states, most recently Hawaii.

Pivotal trials are expected to take place later in 2016 in New York and Illinois, and numerous states are considering legislation that would make DFS legal and introduce various levels of regulation.

DFS NBA /

Tommy G out to early lead over stacked field of DFS pros in annual FCK Challenge

Now in its third year, the annual FCK NBA Challenge is growing into the event its originator hoped it would be. This year’s field is up to 41 players, including many of the most well-known names in daily fantasy sports.

And early leader Tommy Gelati (known simply as Tommy G. in the DFS universe) couldn’t be happier about it.

“It’s a great event,” said Tommy, the daytrader and Sirius XM radio host known for his candor, confidence and GPP success. “I won’t say it’s the biggest 41 names in DFS, because we’ve got some that consistently duck this event, and we know who they are. But we’ve got some of the biggest names in DFS and a lot of these multi-entry guys get exposed because they’re fucking frauds.”

In one paragraph, we get a near-complete encapsulation of what attracts some of the well-known  pros to the 20-contest series that aims to crown the world’s best daily fantasy basketball player.

It’s not the money; bigger paydays could be had for the $2,500 entry fee. It’s more about the fine line between camaraderie and cut-throat competition.

“I wanna swing a sword on Twitter for the next six months,” Tommy said.

Tournament founder Michael Hofeld (aka FishCakeKing) said it was a similar motivation that spurred him to launch the contest a little over three years ago.

“(It) started in October of 2013, in between MLB and NBA,” he said. “It’s when multi-entry debates first flared up. I felt that if I played the best in the world in single entry over a course of games I could compete.”

In a field that’s a virtual who’s who of daily fantasy personalities this year, Hofeld currently sits 40th out of 41 entrants.

“I misjudged.”

But there’s time to catch up.

The tournament spans 20 contests from January-March. The top seven are paid each night, with $1,250 going to the winner, and players are ranked according to their place in each contest in terms of overall points and money won. Those rankings are combined to yield the rank in the overall standings.

Through the first three nights, Tommy G. has won twice, scoring big on Thursday as the only player to own Omer Asik, who chipped in 31.25 points. And in a small field of experienced players, finding that differentiation is increasingly difficult. On Thursday, for example, Langston Galloway, Derrick Williams, DeMarcus Cousins, Myles Turner and Jrue Holiday were all owned by at least 75 percent of the field.

Tommy said the ability for newer players to follow along and learn from what the pros do is a benefit to the entire industry. He said he’s fielding questions about his lineup every night on Twitter, and on RotoGrinders a follow-along challenge has sprung up this year for players who want to test their skills at a lower buy-in.

“This year I didn’t expect a big turnout and it almost didn’t happen,” Hofeld said. “We put it off because of all the legal entanglements.

“If not for DraftCheat chiding to play and take (two-time champ Drew Dinkmeyer’s) crown, it probably wouldn’t have happened. Once I announced it the response was overwhelming. I think it shows that the hardcore DFS enthusiasts have grown substantially. It could have been bigger than 41 people I just didn’t have the time or energy.”

Complete standings are available here; follow @FckChallenge on Twitter for updates.

 

 

DFS industry /

Payment processor Vantiv suspending operations for at least one daily fantasy client

Citing concerns that numerous Attorneys General have found daily fantasy sports to be illegal gambling, a major payment processor is suspending all transactions related to DFS for at least one client.

On Thursday, Vantiv, which handles deposits and withdrawals for multiple daily fantasy operators, notified Birdie Fantasy Golf that it would no longer process payments related to fantasy sports as of Feb. 29.

It is unknown as of Friday morning if other operators have received similar notices, but this is not Vantiv’s first attempt to extricate itself from the legal quagmire surrounding daily fantasy sports.

[UPDATE: The New York Times reported Friday afternoon that Vantiv is also cutting ties with FanDuel and DraftKings]

Early Friday morning the company was still advertising its fantasy-related services on its website, but it has been skittish toward the industry since at least November, when New York Attorney General Eric Schneiderman proclaimed DFS to be illegal gambling and demanded that DraftKings and FanDuel cease accepting customers from the state.

Soon thereafter, Vantiv also asked the companies to block New York players, but since then the sites have been granted stays that will allow them to do business in the state pending a trial expected to commence this spring.

Naming both DraftKings and Schneiderman as defendants, Vantiv has filed a lawsuit in New York, asking the state Supreme Court to provide clarity to what it referred to as “conflicting court decisions.”

Making the legal terrain more treacherous for payment processors: Schneiderman’s salvo is just one of a growing number. More attorneys general have followed with similar opinions, including Illinois, Texas, and, earlier this week, Hawaii. A representative of the Attorney General’s office in Vermont has also said daily fantasy sports contests likely violate state gambling laws, and back in September, Nevada ruled that DFS is gambling and companies must seek a license to operate in the state.

In many states, the industry is pushing back via legislation that would make daily fantasy clearly legal under a regulatory framework. Bills have made significant progress in California and Florida this week, and similar legislation has been introduced in many more.

But the legislative process is a slow one, and while payment processors weigh their risks, some smaller DFS companies are struggling to stay afloat.

Birdie Fantasy Golf owner Kevin Marra says his site is folding.

“Our decision to halt operations is based on our belief that that the upcoming legislation will take 18-24 months to become clear and this will be prohibitively expensive to endure,” he wrote in a blog entry explaining the decision.

DFS regulation /

California bill passes critical Assembly vote with ease; Hawaii AG says DFS is illegal

For supporters of legal and regulated daily fantasy sports, the news Wednesday was mostly positive.

Bills that would make DFS contests clearly legal and introduce varying levels of oversight passed committee votes in both houses of the Florida and Indiana legislatures by comfortable margins, and in California, AB 1437 cleared perhaps its most significant hurdle in the legislative process yet when it passed the California Assembly with another near-unanimous vote.

In a less-promising development, Hawaii’s Attorney General issued a formal opinion stating that real-money daily fantasy contests violate the state’s gambling laws. In each house of the Hawaii legislature, there have been bills introduced in the last week that would provide further clarification of DFS legality. Two bills seeks to authorize and regulate, two would establish fantasy sports as clear violations of the state’s gambling laws.

Neither DraftKings, FanDuel or the Fantasy Sports Trade Association has commented on the Hawaii AG’s opinion.

In California, AB 1437, which had faced a Thursday deadline for passage in the Assembly, now moves to the State Senate after receiving only two “nay” votes in its three appearances since the beginning of the current session. Both came from Marc Levine, a vocal opponent of daily fantasy who has asked Attorney General Kamala Harris to rule the contests illegal gambling.

Levine, who was recently targeted by the Fantasy Sports Trade Association with an attack ad, spoke Wednesday, reiterating his belief that DFS is gambling and therefore any measures to legalize it require a constitutional amendment passed by the state’s voters.

That belief was clearly not shared by his fellow Assemblymembers.

Eric Linder, who spoke in support of 1437, said it was not the Assembly’s place to weigh in on the legality of DFS, but instead to act to provide protection for the “millions of Californians” who play daily.

Harris has not responded directly to Levine’s letter and appears content to let the legislature provide legal clarity on the matter.

As currently composed, AB 1437  will require daily fantasy operators to pay a one-time licensing fee of an unspecified amount, as well as quarterly regulatory fees based on gross income. Other measures recently added to the bill include a restriction on players under 21 years old, and a requirement that sites identify experienced players.

The FSTA issued the following statement after the bill’s passage:

“We appreciate that the Legislature is taking thoughtful and appropriate action to ensure that the millions of Californians who play daily fantasy sports can continue to enjoy the contests they love. We look forward to continuing to work with Assembly member Gray and the Senate to craft legislation that protects consumers and provides balanced regulation of the industry.”

***

Elsewhere…

 

DFS regulation /

Fantasy industry strikes back at California politician and vocal opponent with radio ad

With a vote looming on a bill that would legalize and regulate daily fantasy sports in California, the fantasy sports industry has launched an offensive against one of its most vocal critics in the state.

In a radio ad that is reportedly airing on three radio stations in Assemblymember Marc Levine’s district, the Fantasy Sports Trade Association calls for voters to contact Levine.

“…if Assemblyman Marc Levine wants to vote no on fantasy football, maybe we should be voting no on Marc Levine.”

Read the full text of the ad below or hear it here.

Levine became the fantasy industry’s top target in the state by writing a letter to Attorney General Kamala Harris asking her to rule daily fantasy sports to be illegal gambling under state law.

“(Daily fantasy sports) is illegal at this moment and should not continue,” Levine told the Orange County Register in November. “I will be very glad to consider the strongest regulations in the country, if it is to be permitted in California, but not until we’ve had that conversation. These websites should cease and desist immediately because they’re operating illegally in the state of California.”

Since then, a bill that would make DFS a legal and regulated game in California has been re-introduced in the state assembly and has breezed through its first two committee votes, with only Levine voting against thus far.

It’s expected to come up for a vote on the Assembly floor Wednesday and must pass with a 2/3 majority by Thursday or be effectively sent back to the starting line.

“Fantasy sports betting sites are trying to bully their bill through the legislature,” Levine told Sacramento television station KCRA. “Legislators and lawmakers like me are trying to do the right thing on behalf of our constituents.”

“It turns off voters and it turns off legislators,” he told the Los Angeles Times.

Full text of the ad:

Right now state legislators are working to protect your right to play fantasy football—but not Assemblyman Marc Levine. He’s the politician who wants to ban fantasy football in California.

While other legistlators all voted to adopt the industry’s highest standards of play, Assemblyman Levine vote “no” and thinks the government should take fantasy sports away. Permanently.

Next, there’ll be laws against playing fantasy football.

No thank you, Assemblyman Levine. We work hard during the week, and sometimes it’s just fun to play fantasy sports with our friends. Rather than standing with California’s consumers, Assemblyman Marc Levine said, “no.”

Let’s tell Assemblyman Marc Levine “no,” by going to www.CaliforniaFans.org. Because if Assemblyman Marc Levine wants to vote no on fantasy football, maybe we should be voting no on Marc Levine.

Send a message to Marc Levine at CaliforniaFans.org.

DFS legal news /

California DFS bill speeding through legislative process, but deadline looming

A California bill that would make daily fantasy sports a legal and regulated industry in the state is streaking through the legislative process, but its passage is far from assured.

Assembly Bill 1437 has already passed through two committee votes by near-unanimous margins since the 2016 session opened on Jan. 6. Next, it will be heard on the Assembly floor Monday, with a vote expected later this week, according to the Orange County Register.

The bill needs 2/3 approval to move to the Senate and must pass through the Assembly by Thursday or be effectively sent back to the starting line to be re-introduced.

Authored by Assemblymember Adam Gray, the bill is in its third iteration after being originally introduced in February  and heavily amended in Sept. 2015.

Notable changes since it was re-introduced earlier this month include unspecified license and regulatory fees, a restriction on players under 21 years old, and the requirement that sites identify experienced players. The latter two dovetail with proposed regulations from Massachusetts Attorney General Maura Healey, which have been met with ambivalence from the daily fantasy industry.

The fantasy industry has strongly opposed the age-21 restriction in Massachusetts, pushing instead for the limitation to be set at 18. Peter Schoenke, chair of the Fantasy Sports Trade Association wrote the following in the FSTA’s public comments submitted to Healey:

The FSTA also believes the age at which people should be able to play paid fantasy sports should be 18 years old. At 18 years old you are old enough to vote in this country and make adult decisions. Furthermore, an age limit of 21 years old appears to be tied to gambling products and casinos where the drinking age is a major factor for participation. Fantasy sports are not necessarily played at a physical location, so a similar age limit tied to drinking laws should not apply

Operators also expressed some concerns with how the proposed regulations in Massachusetts seek to define “highly experienced” players, but appear to have no qualm with the idea at a philosophical level. DraftKings announced last week that it will soon begin labeling experienced players and is reportedly still discussing the criteria.

The bill in California doesn’t include a definition of highly experienced players, and the FSTA has not commented publicly on the specifics of the amended bill, but Schoenke told the Orange County Register he was pleased.

“We’re rolling in the same direction,” Fantasy Sports Trade Association chairman Peter Schoenke said after the bill passed through committee. “I’m really encouraged by where it’s going.”