Posts Tagged ‘FanDuel’

DraftKings, FanDuel to Merge

 DraftKings, FanDuel to Merge

We all knew it was coming, but on Friday morning, DraftKings and FanDuel announced that they have agreed to a merger, a deal which will create a company that will have a virtual monopoly on the daily fantasy sports industry.

Per the press release, DraftKings CEO Jason Robbins will be the new company’s Chief Executive and FanDuel CEO Nigel Eccles will be the Chairman of the Board. The Board of Directors will consist of three people from each of DraftKings and FanDuel with one independent director.

No financial terms have been released, but ESPN.com’s David Purdum reported that sources close to negotiations have indicated that the merger will likely be 50/50.

The companies cite “operational efficiencies and cost savings” as benefits of the merger, as well as the ability to allow for a “greater focus on developing new products and features, including more variety in contest formats, loyalty programs, enhanced social functionality and ancillary sports-oriented content and experiences, all aimed at creating a more diverse, exciting and appealing experience for fantasy sports players and all sports fans.”

Of course, the former rivals also see the merger as a vehicle towards quicker profitability, as well.

The press release continued:

The combined company will be able to invest in strategic partnerships across the sports ecosystem. Media, advertising and other partners will benefit from access to more products and customers as a result of DraftKings and FanDuel’s diverse user base and league relationships, as well as increased investment in advertising. Together, the combined entity can accelerate growth of the fantasy sports category, drive broader and deeper fan engagement, and more efficiently reach those players.

One of the major cost savings that people around the industry are looking at is a reduction in combined legal costs. Both companies have been engaged in legal struggles and lobbying efforts on the state level, draining their coffers of funds to the point where it has been reported that they are having trouble paying the bills. Combining forces allows them to eliminate many of these redundant costs.

Interestingly, at least one competitor hopes the merger passes regulatory hurdles. DRAFT founder and CEO Jeremy Levine told ESPN.com that he essentially sees the combined company being able to pave the way for the “little guys.”

“Prior to the tumult of the past year, FanDuel and DraftKings were well on their way to becoming multibillion-dollar pillar business[es] in sports,” he said. “There still will be massive business built in this space, but it won’t be FanDuel or DraftKings individually. Due to the merger, the opportunity is now there for the few companies that were able to survive and strengthen in the past year.”

If the merger gets the ok from regulators – and that’s a big “if,” considering DraftKings and FanDuel own around 90 percent of the daily fantasy sports market – the deal is expected to be completed in the second half of next year. In the meantime, the two sites will continue to operate separately. At this time, it is not known what the name of the new company will be.

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FanDuel, Yahoo Launch DFS Contests in Season-Long Wrappers

 FanDuel, Yahoo Launch DFS Contests in Season Long Wrappers

Following DraftKings’ launch of a new daily/season-long hybrid game, rivals FanDuel and Yahoo! have introduced their own versions of DFS with a season-long flavor. FanDuel’s is called “Friends Mode” while Yahoo’s is the “Yahoo Cup.”

We’ll start with FanDuel’s Friends Mode, as it most closely mirror’s DraftKing’s Leagues. Really, it is just about the same thing, which isn’t surprising since the two largest DFS sites tend to do pretty much everything in lock-step. In fact, there is a good chance that FanDuel would have called it Leagues if DraftKings hadn’t done it first.

In Friends Mode, anyone can create a private league and then invite friends (whether or not those friends are already on FanDuel) to join, similar to how one would get a league together in season-long fantasy. The contests, though, are week-to-week (or day to day, if we’re not talking football, but who are we kidding – we are), just like in regular DFS and are setup by the commissioner of the league. For the most part, that’s it. Friends Mode is basically away for friends to get together and play against each other in fantasy sports without the pressure of remaining diligent about their teams for a full season.

The season-long hybrid part comes into play with a leader board for the league, giving players a chance to see how they are faring against their buddies in the long-term. The daily/weekly contests are where the money comes in; the season-long leader board looks to be just for bragging rights.

Yahoo’s DFS/season-long combo shares some traits with that of DraftKings and FanDuel, as contests run weekly during the NFL season and overall scores are added up across the enter season, but that is where the similarities stop. In the Yahoo Cup, everyone on the site who participates is competing against everyone else; there are no private leagues in this case.

Yahoo will be awarded $ 10,000 in prizes to the top points earners for Week 1 and presumably will be offering prizes for the remaining 15 weeks of the contest (it is only going through Week 16 of the NFL season). On top of that, the top 10,000 total points earners across all weeks will share $ 93,000 in prizes at the end of the Yahoo Cup with the winner earning $ 50,000.

It looks like in similarly-structured contests on Yahoo that consist of weekly contests adding up to longer competition only advance a certain number of players to subsequent rounds, but from the looks of it, everyone qualifies for every round of the Yahoo Cup. There is no requirement to participate in every week, though obviously a person’s chances of winning a season-end prize will be greatly diminished without submitting a lineup each and every week.

The best part: the Yahoo Cup is free to play.

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DraftKings, FanDuel to End College Sports DFS Contests

 DraftKings, FanDuel to End College Sports DFS Contests

This weekend marks the end of the college basketball season and with it, the end of college sports contests on daily fantasy sports (DFS) sites DraftKings and FanDuel. The two DFS leaders announced Thursday that after Monday’s championship game of the men’s NCAA basketball tournament, they will cease offering contests on college sports.

Gambling on college sports, while extremely prevalent, has always been more controversial than gambling in professional sports. And since many (most?) people consider DFS gambling, DFS games based on college sports have been a sticky issue.

According to ESPN.com, though, the decision to stop college sports contests shouldn’t hurt the daily fantasy sports sites. College basketball and football combined make up only 3 percent of FanDuel’s revenue. As ESPN.com put it, “the NFL daily fantasy market is 10 to 20 times larger than the college football market.”

In a statement posted on its website, FanDuel said of the decision:

As a leader in calling for smart, common sense regulations for the fantasy sports industry, FanDuel has had months of productive conversations with the NCAA, their member institutions, and various state legislators to better understand their concerns around fantasy sports contests based on amateur athletics. It is clear that this is an issue that matters to a variety of constituencies and we feel that the best path forward is to suspend offering these contests pending resolution on the issue within state legislatures.

It added:

The NCAA’s home state of Indiana and our home state of New York were two of the first states to take up this debate. Indiana has passed and New York is considering fantasy sports laws that protect consumers, protect the right to play fantasy sports, AND contain carve-outs stating fantasy contests involving amateur sports are barred in their states. The Massachusetts Attorney General issued regulations with a similar carve-out. We supported all of these efforts, and going forward we will actively support bills containing the same provisions. We are pleased that we can work together with the NCAA on smart regulations for the fantasy sports industry.

In a statement published by ESPN.com, NCAA president Mark Emmert expressed his gratitude for the concession made by DraftKings and FanDuel:

We appreciate and commend DraftKings and FanDuel’s action to stop offering contests involving college, high school and youth sports,” NCAA president Mark Emmert said in a statement issued Thursday. “This action culminates months of hard work between all parties to reach a place that is good for amateur sports and most importantly, the young people who participate. We will work diligently with our member schools over the coming year to ensure such amateur sports ‘carve outs’ are included in pending states’ legislation.

As FanDuel mentioned, of the three states that have enacted DFS regulations, Massachusetts and Indiana have specifically included language that prohibits DFS sites from offering contests on amateur sports, which includes college sports. ESPN notes that of the 30 states to introduce DFS legislation this year, though, only five have included a ban on college sports.

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DraftKings, FanDuel Reach Settlement with NY AG, Will Cease Operations in NY

 DraftKings, FanDuel Reach Settlement with NY AG, Will Cease Operations in NY

On Monday, DraftKings, FanDuel, and the New York State Office of the Attorney General announced that they have reached a settlement in the legal battle over daily fantasy sports (DFS) in the Empire State. In exchange for the two DFS leaders withdrawing from the New York market until at least September, NY AG Eric Scheiderman has agreed to drop most of the charges against the two companies.

The reason September is key for DraftKings and FanDuel is because their appeal regarding the legality of DFS is scheduled to be heard that month. If the Court rules that DFS is, in fact, legal in the state, then one would assume that DraftKings and FanDuel could get right back to offering real money contests.

In the meantime, there are DFS bills circulating in the state legislature. According to the terms of the settlement, if one or more of the bills pass by the time the Senate and Assembly adjourn on June 30th, therefore legalizing DFS, then the lawsuits/charges levied against DraftKings and FanDuel by the New York Attorney General will be dropped except for the charges of False and Misleading Advertising.

If the Attorney General Schneiderman wins the appeal in September, DraftKings and FanDuel have agreed to do away with their lawsuits and appeals. The AG will do the same, but the false advertising charges will stick.

The sites have also agreed to process withdrawal requests from customers within seven days of when the requests are made. It appears that customers of the two sites can choose to keep their funds on deposit if they wish so that they can play in real money games if they find themselves logging in from a state in which the sites are still active. The sites are permitted to host free contests and can award prizes, as long as players are not required to pay an entry fee.

FanDuel posted a statement on its website, explaining the situation. The statement reads, in part:

New York is a critical state for FanDuel. FanDuel is headquartered in Manhattan, where we employ more than 170 young, smart, passionate fans who are committed to innovating and providing the best fantasy experience possible. We are proud to be one of New York’s largest startup companies, and while it is disheartening for us to restrict access to paid contests in our home state, we believe this is in the best interest of our company, the fantasy industry and our players while we continue to pursue legal clarity in New York.

DraftKings did, as well:

We are an industry leader in technology, innovation and consumer protections, and we are grateful to the hundreds of thousands of New Yorkers who have enjoyed playing fantasy sports on DraftKings for the last 4 years. We will continue to work with state lawmakers to enact fantasy sports legislation so that New Yorkers can play the fantasy games they love.

On the other side, Attorney General Schneiderman celebrated:

I’m pleased to announce that both FanDuel and DraftKings will stop taking bets in New York State, consistent with New York State law and the cease-and-desist orders my office issued at the outset of this matter. As I’ve said from the start, my job is to enforce the law, and starting today, DraftKings and FanDuel will abide by it. Today’s agreement also creates an expedited path to resolve this litigation should that law change or upon a decision by the appellate division. Regardless, our key claims against the companies for false advertising and consumer fraud are not affected by the agreement and will continue.

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New York AG Going Even Harder After DraftKings, FanDuel

 New York AG Going Even Harder After DraftKings, FanDuel

It looks like New York Attorney General Eric Schneiderman has three-bet daily fantasy sports (DFS) leaders DraftKings and FanDuel and is putting their tournament lives at risk. Less than two months after filing numerous complaints against the two companies, including charges of illegal gambling and advertising fraud, the AG has amended the complaint in an effort to totally bury the DFS sites.

In the amended complaint, Schneiderman is going for the jugular, seeking the return of all funds wagered by New York customers of DraftKings and FanDuel (something, in this writer’s opinion, that only the most weasely customers would want) PLUS punitive damages of as much as $ 5,000 per player.

DraftKings has said it has around 375,000 customers and ESPN has reported that both sites have about 600,000 combined, so the punitive damages would amount to around $ 3 billion. Thus, if Schneiderman gets his way, not only would DraftKings and FanDuel have to bolt New York, but they would probably cease to operate altogether. That worst-case scenario sum of money would almost surely sink the ships.

Both companies issued public statements in regards to the amended complaint. First, DraftKings, courtesy of the site’s lead counsel, David Boies:

Our arguments remain strong and we are confident in our appeal for four simple reasons:

1. The Attorney General has still offered no evidence that supports a preliminary injunction.

2. Daily fantasy sports contests are not gambling — their outcome is controlled by the knowledge and skill of DFS players — that’s how you win or lose.

3. The only difference between a daily and a season-long fantasy contest is how long it lasts and the Attorney General has said that season-long fantasy sports contests are lawful.

4. It is legal for skills-based contests to charge entry fees and award prizes to participating contestants. A DFS player exercises “control and influence” over whether they win a prize by their choice of a roster which is without a doubt a skills-based exercise.

FanDuel posted its response on its website and, as has been the case with many of the company’s statements, it tries to appeal to the emotion of fantasy players:

As we have previously iterated, FanDuel remains committed to offering our fantasy contests to the Yankees, Mets, Jets, Giants, Bills, Knicks, Nets, Rangers, Islanders and Sabres fans that comprise the great state of New York and love fantasy sports – be it season-long or daily. As one of New York’s fastest growing startup companies we are thoroughly disappointed in the Attorney General’s ongoing actions and will fight this meritless, amended suit until fantasy sports are safeguarded for all sports fans.

Both DraftKings and FanDuel continue to operate in New York, thanks in large part to a stay granted by New York appellate Judge Paul Feinman after New York Supreme Court Judge Manuel J. Mendez granted Eric Schneiderman an injunction to prevent the sites from operating in the state. DraftKings had decided not to budge at any point in this battle, though FanDuel temporarily stopped operating in New York. When given the stay, FanDuel revved up again and resumed taking action from New Yorkers.

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