If you’ve caught any of the 2015 NFL season on television, you’ll no doubt recognize these commercials:
FanDuel and DraftKings are attracting a lot of attention these days, and not just from the estimated 50 million people who play fantasy sports annually. Sports leagues and venture capital firms have all rushed to get a piece of the two companies. In the October 2015 Turnkey Sports Poll, respondents cited daily fantasy as the category with the biggest revenue potential for sports properties over the next five years (it beat out personal electronics, healthcare services, telecommunications and IT services).
In recent years, the estimated $789 million invested in daily fantasy sites from investors such as Google Capital, Time Warner Investments, Turner Sports NBC Sports Ventures, Comcast, NBC Sports Ventures, Fox Sports, Kraft Group and the NBA added an air of legitimacy and stability to games. All aboard the daily fantasy gravy train, right?
With almost 1 billion invested by some of the most prominent companies in sports and entertainment, that’s definitely not the headline you want to read. A joint statement from the two entities involved condemned the fraud, stating “DraftKings and FanDuel have always understood that nothing is more important than the integrity of the games we offer to fans.” The “scandal”, an isolated incident, featured a rogue employee of one of the two companies using privileged information to place bets, and win, on the other company’s site. The two companies announced they had taken steps to self regulate by “restricting employee access to and use of competitive data for play on other sites.” Case closed… right?
As noted in the NPR article, “Nevada regulators have ordered daily fantasy sports sites like FanDuel and DraftKings to shut down, saying the businesses can’t operate in the state without a gambling license.” I’ll save the debate over the legality of daily fantasy gaming for the lawyers and legislators, but I will say this: this type of high profile negative attention can’t be good, and it’s my guess that regulation at any level would likely cut into investors’ ROI.
In that same October 2015 Turnkey Sports Poll, 54% of respondents felt that three years from now, the daily fantasy games sponsorship category will be cooler than today, which would lead one to believe that this isn’t the last stop for the daily fantasy gravy train. However, with a high profile list of investors and – seemingly – a war chest flush with cash, it will be interesting to see how things evolve as FanDuel and DraftKings battle each other AND the government for supremacy.
Are you a Daily Fantasy player (or someone slowly going insane thanks to the key players’ stronghold on commercial advertising)? Tell Turnkey’s Patrick Kuhlen where you think the category is headed.