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FEATUREFriday 12 February 2016
Fantasy sports companies defend embattled industry
PHILIP MARCELO ers pay to compete online
Associated Press
BOSTON (AP) — Daily fan- for cash prizes by picking
tasy sports companies say
their industry remains vi- teams of real life athletes
able despite a rocky start
to 2016. and racking up “fantasy”
The industry’s top compa-
nies, DraftKings and Fan- points based on how they
Duel, are on the defensive
after taking hits to their perform. Another 14 states
businesses in recent weeks
as scrutiny by state policy- are expected to weigh
makers across the country
continues to intensify. legislation before the year
This week, it was disclosed
that ESPN and DraftKings is over, she said.
ended an exclusive ad-
vertising deal and FanDuel Of those with bills in play,
confirmed Wednesday it
had laid off 55 workers in its California, Indiana and Vir-
Orlando, Florida, office.
ESPN and DraftKings de- ginia have seen proposals
clined to comment on the
end of their partnership, clear at least one cham-
which was announced last
June and made DraftKings ber of their legislature. Bills
the network’s official daily
fantasy sports offering. But have also advanced in the
DraftKings spokeswoman
Sabrina Macias says the legislative committee pro-
company isn’t retrenching.
“Our business position is cess in Alabama, Florida,
strong and we have no
intention to scale back Missouri, Nebraska and
any operations,” she said,
pointing to the company’s Oklahoma. Some industry
launch in the United King-
dom last week. “We’re watchers say this week’s
continuing to innovate
and learn.” developments may point
FanDuel, meanwhile, said
the layoffs are concentrat- to a slow unravelling of the
ed in its research and de-
velopment division, which daily fantasy sports genre.
is being shuttered. The job
cuts do not impact the rest “In some respects, this
of the Florida office, which
includes an expanding seems like death by a
customer service opera-
tion, the company said. thousand cuts,” Daniel
FanDuel CEO Nigel Eccles,
in a brief call with The As- Wallach, a Florida lawyer
sociated Press, said the
company, which has over In this Sept. 9, 2015 file photo, Len Don Diego, marketing manager for content at the DraftKings who specializes in gam-
400 employees, is focused daily fantasy sports company, works at his station at the company’s offices in Boston.
on making progress on the bling and sports law.
legislative front. Associated Press
“What you’re seeing is an Media conglomerate 21st
industry that’s very quickly
going from an unregulated Century Fox said in a Secu-
state to a regulated state,”
he said. “Whenever you rities and Exchange Com-
have that, there’s going to
be turmoil.” mission filing on Monday
Macias, of DraftKings,
which has more than 350 that it was marking down
workers, also downplayed
the recent developments, the value of its $160 million
highlighting instead the in-
dustry’s state-by-state ef- investment in DraftKings by
forts to secure legislation
about 60 percent.
Last month, Vantiv, a
payment processing
company, said it would
stop serving daily fanta-
sy sportscompanies by the
end of this month.
And banking giants Citi-
group and Bank of Ameri-
ca are blocking their New
York customers from play-
ing the contests because
the attorney general in
that state is seeking to shut
down the industry.
An industry-wide implosion
isn’t imminent, but daily
fantasy sports companies
have to change the way
they operate, said Jeffrey
Ifrah, a Washington, D.C.-
based lawyer who repre-
sents about a dozen daily
In this Nov. 24, 2015 file photo, FanDuel advertising covers the post at an NCAA college basket- fantasy sports companies
ball matchup in the FanDuel Legends Classic consolation game, at the Barclays Center in New
York. Daily fantasy sports companies have said their industry remains viable despite a rocky start smaller than DraftKings
to 2016. FanDuel confirmed it was laying off 55 workers in its Orlando, Fla., office, and ESPN and
DraftKings ended an exclusive advertising deal. and FanDuel.
Associated Press “The current model of ex-
tensive advertising and
marketing budgets is prob-
that would keep its games consumer protection per- declared them gambling ably no longer viable,” he
legal but regulated. spective.” games and either banned
“A couple of setbacks here Fantasy sports sites say their them outright or required said. “The additional regu-
and there do not neces- contests aren’t gambling operators to get gambling
sarily reflect the larger pic- because a player’s skill lev- licenses. lation and cost of regulato-
ture,” she said. “There’s el is more of a factor than Roughly 19 states are con-
progress both on the leg- chance in determining suc- sidering bills to regulate ry compliance likely means
islative front and from the cess, but some states have the industry, in which play-
the end of significant ad-
vertising and it may mean
a reduction in future pri-
vate investment in the
industry.”q
