Betting roundup: DraftKings steps in, bails out shuttered DFS site FantasyHub

After three weeks without access to their money, players from FantasyHub will have their balances restored, thanks to a bail-out deal from DraftKings.

The daily fantasy sports industry co-leader, DraftKings announced Thursday night it would take on FantasyHub’s obligations to both players and charities, a sum of a “few hundred thousand dollars,” according to ESPN’s David Purdum, who broke the story.

“This is not an acquisition deal or an asset purchase deal,” DraftKings co-founder Matt Kalish told ESPN. “This is a very simple deal, where we’re assigning two liabilities from [FantasyHub] over to DraftKings in an effort to do the right thing for their player base, which has a nearly 80 percent overlap with our own. We never want to see our player base go through an experience that’s negative like this. What happened here was reprehensible. It is a breach of trust for these players and we share a lot of these players with them. We just didn’t think it was the right thing to do to sit on the sideline and let that happen. We had the ability to step up and do something.”

FantasyHub, a smaller site founded in Louisville, Ky., and based in Austin, suspended operations on Feb. 19, leaving players with no way to access their funds. Deepening the scandal, anecdotal reports surfaced that FantasyHub hadn’t paid some of the charities that players were told a portion of their winnings and deposits were going to.

DraftKings contacted FantasyHub players via email Thursday night with a notification that they can now withdraw or transfer balances through a page on DraftKings’ website.

FantasyHub is the second site to shut down in 2016 without immediately paying out its players. In January, FantasyUp dissolved, saying it did “not have the funds needed to process the withdrawals to all customers.” The company was later acquired by iTEAM Network, which restored player balances and relaunched the site.

AROUND THE WEB

LOOK WHO’S TALKING

“Jose Fernandez is a great example. Jose Fernandez will strike you out and stare you down into the dugout and pump his fist. And if you hit a homer and pimp it? He doesn’t care. Because you got him. That’s part of the game. … If a guy pumps his fist at me on the mound, I’m going to go, ‘Yeah, you got me. Good for you. Hopefully I get you next time.’ That’s what makes the game fun.” —Bryce Harper on tearing down baseball’s unwritten rules in a wide-ranging profile by ESPN The Magazine.

TWEETS OF NOTE

ODDS & ENDS

  • Whatever your perspective, it was an all around great day for baseball quotes. In addition to Harper’s candid thoughts on the state of the game, we were gifted with Goose Gossage deciding to go in on Jose Bautista and “nerds” in a profanity-filled rant.
  • Some odds and prop bets have been posted for next month’s Manny Pacquiao/Timothy Bradley fight.
  • DraftKings CEO Jason Robins will make an appearance at South by Southwest next week in Austin.
  • At least three NFL GMs have crossed Brent Grimes off their list of possible signings, due to his outspoken wife.
  • Bettors took a brutal loss/miraculous win in the Oklahoma/Iowa State game last night.
  • And bettors who pushed the Fresno State/UNLV line from a pick ’em to Fresno -3.5 were rewarded last night when the Bulldogs took a 13-point win.

ODDSMAKER’S TAKE

“It has been wild, and it pretty much emulates what we’re going to see next week. There is still David and Goliath, but that gap has narrowed so much.” —Sunset Station sports book director Chuck Esposito on this week’s college basketball upsets.

Betting roundup: FanDuel alters MLB scoring

A week after rival DraftKings announced significant changes to its baseball contests, FanDuel has tweaked its scoring system.

The biggest difference is that batters will no longer be penalized with negative points for outs; otherwise, the points rewarded have increased, but ratios remain the same. For example, last season a single was worth one point, a double worth two, etc. This season, a single is worth three points and a double worth six, and so on.

See below for the complete scoring chart.

DraftKings altered its scoring and roster composition rules last week, no longer deducting for caught stealing, subbing a utility hitter for an outfield slot, and dropping the maximum number of players from a single team from six to five.

FanDuel’s roster rules remain unchanged—rosters must be composed of players from three different teams with no more than four players from a single team—and a FanDuel representative said no other changes are forthcoming.

Last summer, FanDuel lost ground to DraftKings, which is partnered with Major League Baseball,  in the ongoing battle for market share, partly due to the popularity of DraftKings’ baseball vertical. Nonetheless, FanDuel remains the industry leader, according to a recently published study, and DraftKings’ relationship with MLB is reportedly tenuous.

CategoryFanDuel 2016FanDuel 2015DraftKings 2016DraftKings 2015
1B3133
2B6255
3B9388
HR1241010
RBI3122
BB3122
R 3122
SB6255
CSN/AN/AN/A-2
HBP3122
OutN/A-0.25N/AN/A
W12444
ER-31-2-2
K3122
IP312.252.25

Note: DraftKings also has categories for Hits Against, BB against, Hit Batsmen, Complete Game, Complete Game Shutout, and No Hitter. 

AROUND THE WEB

  • Japanese baseball’s most prestigious franchise has been rocked by a gambling scandal, forcing the resignation of the team’s top executives.
  • Wednesday was the beginning of free agency season in the NFL, which means loads of fake tweets. ESPN fell pretty hard for one yesterday.
  • Here’s a recap of the deals that actually (probably) did happen, including the Texans agreeing to terms with Brock Osweiler and Lamar Miller.
  • Connecticut lawmakers look to regulate fantasy sports sites.

TWEETS OF NOTE

ODDS & ENDS

Betting roundup: DraftKings tweaks MLB rules

With Opening Day just a month away, DraftKings unveiled changes to its Major League Baseball contest rules Thursday, tightening the limitations on “stacking” and adding a utility position, among others.

Rosters will still be made up of 10 players, including two pitchers and eight hitters, but one roster spot has been changed from a dedicated outfield position to a utility hitter, which can be chosen from any position.

Users will also be limited to five hitters from a single MLB team, one less than previous restrictions, and rosters must include players from two different MLB games. The prior rule stipulated that rosters must include players from three separate MLB teams. The caught-stealing point deduction has also been eliminated.

DraftKings hasn’t commented since the rules were modified Thursday morning, but the changes were a response to player requests, according to a site representative.

Under the new rules, DraftKings MLB contests will more closely resemble those at industry co-leader FanDuel in some ways, but significant differences remain.

Stacking: DraftKings will allow five hitters from a single team; The FanDuel limit is four players (including a pitcher) from a single team.

Roster construction: DraftKings now requires players from two separate MLB games, while FanDuel requires players from three different MLB teams. FanDuel maintains a roster with one starting pitcher slot and eight traditional positions, while DraftKings has two pitcher spots, C, 1B, 2B, 3B, SS, OF, OF, UT.

The sites also diverge quite a bit in scoring.

Scoring at DraftKings:

  • Hitters will accumulate points as follows:
    • Single = +3 PTs
    • Double = +5 PTs
    • Triple = +8 PTs
    • Home Run = +10 PTs
    • Run Batted In = +2 PTs
    • Run = +2 PTs
    • Base on Balls = +2 PTs
    • Hit By Pitch = +2 PTs
    • Stolen Base = +5 PTs
  • Pitchers will accumulate points as follows:
    • Inning Pitched = +2.25 PTs
    • Strike Out = +2 PTs
    • Win = +4 PTs
    • Earned Run Allowed = -2 PTs
    • Hit Against = -0.6 PTs
    • Base on Balls Against = -0.6 PTs
    • Hit Batsman = -0.6 PTs
    • Complete Game = +2.5 PTs
    • Complete Game Shut Out = +2.5 PTs
    • No Hitter = +5 PTs

Scoring at FanDuel:

Hitters Pitchers
1B = 1pt W = 4pts
2B = 2pts ER = -1pt
3B = 3pts SO = 1pt
HR = 4pts IP = 1pt*
RBI = 1pt
R = 1pt
BB = 1pt
SB = 2pts
HBP = 1pt
Out (calculated as at bats – hits) = -.25pt

* * *

AROUND THE WEB

LOOK WHO’S TALKING

“The handle for UFC last year was nearly equal to boxing, which is saying something because we had a really big handle on the Mayweather fight.” —MGM Resorts sports book director Jay Rood, who said this weekend’s UFC event might attract $5 million in handle at MGM’s books.

TWEETS OF NOTE

ODDS & ENDS

DraftKings tightens purse strings, significantly alters affiliate policy

Confirming weeks of speculation, DraftKings has altered its policy for affiliate marketing sites.

Once billed as “The Best Affiliate Program in Fantasy Sports,” the new terms will significantly reduce the outflow of funds to partners who refer new users to DraftKings and continue the company’s trend of belt-tightening procedures.

[Editorial disclosure: DailyFantasyTalk.com is a DraftKings affiliate partner.]

Closely mirroring recent changes to its refer-a-friend policy, DraftKings’ new affiliate program institutes an array of changes, including placing a cap of $1,000 on how much an affiliate partner can earn per referral per month and aging out players on whom affiliates can earn commission after two years.

It rewards a 40 percent commission on referrals for the first 30 days after an initial deposit, and 25 percent thereafter. Affiliates that fail to refer at least two new players within any 30-day period will have that rate dropped to 15 percent.

Perhaps most damaging of all for affiliate partners:

Further, if the Affiliate fails to acquire a minimum of fifty (50) New Money Players in a sixth (sic) (6) month period, DraftKings reserves the right to immediately terminate this Agreement without notice.

The changes are bound to be unpopular with partner sites, but among industry observers, they were not unexpected. PokerStars made similar changes to its affiliate program and VIP rewards last year, and the general consensus seems to be that with last fall’s marketing blitz, DraftKings outstripped what affiliate partners can offer.

In an “Ask Me Anything” session on Reddit in October, high-volume player Cory Albertson pointed out how much revenue sites may be losing through these deals.

The affiliate model is flawed in that it handcuffs the sites in how much rake they get to see. It’s not necessarily the case that RotoGrinders deserves to get 35% rake forever when someone clicks their link. They deserve some money and have been great for DFS but when so much money is flowing to affiliates it in some ways prevents sites from developing better VIP rewards which are badly needed in DFS right now.

Now, with ongoing legal battles across the country and annual regulatory and licensing fees possibly on the horizon in many states, daily fantasy operators are entering a period of relative austerity, at least compared to the free-spending days of Sept. 2015.

DraftKings recently withdrew from its exclusive marketing deal with ESPN and moved out of its 23,500 square foot penthouse offices in Manhattan. Meanwhile, industry co-leader FanDuel has been hit with two rounds of layoffs already in 2016.

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.

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.

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.

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.

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.

Report: After 18 months of growth and expansion, FanDuel laying off employees

FanDuel, one of the two leading companies in the daily fantasy sports industry, is reportedly scaling back with employee layoffs after expanding rapidly for most of the last 18 months.

Citing multiple sources within the company, Forbes first reported on the layoffs. FanDuel has yet to comment on the report.

…New York-based FanDuel has begun the process of laying off some of its staff. The layoffs were announced by a senior executive within the company. At the time of publication, it is unknown how deep the cuts are or across how many departments. Initially reached for comment on Tuesday, a spokesperson for FanDuel denied any layoffs were occurring. Multiple emails to FanDuel seeking comment on Wednesday after confirmation of the layoffs went unreturned.

On a company history page apparently last updated in 2014, FanDuel reported having 79 employees in three offices in the United States and Scotland. As of Wednesday, the company’s LinkedIn profile claimed over 500 employees across its US and UK offices.

Fueled by massive fundraising rounds, FanDuel poured considerable resources into development and acquisitions in 2015. The company opened an office in Orlando and staffed it with 40 former Zynga employees, then acquired a Scotish app development company and DFS analytics site numberFire within a matter of months.

The company also started generating more of its own content under the FanDuel Insider blog umbrella.

“Our ambitions have really broadened,” CEO Nigel Eccles told TechCrunch, after the numberFire acquisition. “We’ve started to think of ourselves less as a fantasy sports business — we want to make sports more exciting.”

And then there were the ads, without which no narrative featuring FanDuel or DraftKings is complete.

The companies combined to spend more than $220 million on television advertising alone in the span of three months in the latter half of 2015, garnering attention from prospective customers, opponents from the broader gaming industry and aggressive politicians while burning through significant portions of their fresh capital.

Both companies defended the ad spend in September when public backlash against the ubiquitous campaigns began to boil over into attention from major media outlets, but have since admitted (quite begrudgingly, in DraftKings’ case), that maybe they went a little overboard.

The content of those ads, and the inability to escape them, are cited in virtually every media report about the industry and every piece of harmful legislation or negative opinion from an attorney general. One politician in Washington state has even introduced a bill that would make advertising DFS a felony in the state.

In recent months, the funds that the company spent on advertising—a planned expense—have gone toward legal defenses and lobbyists, likely an unplanned expense, at least to the extent the companies now find necessary.

And while advertising and legal spending have been a drain on both of the industry’s leading companies, it has likely been especially costly to FanDuel. The company, which had a three-year head start on DraftKings and opened 2015 as the clear industry leader, saw that lead dissipate entirely by the close of the year.