Fantasy companies defend embattled industry
BOSTON >> Daily fantasy sports companies say their industry remains viable despite a rocky start to 2016.
The industry’s top companies, Draft Kings and Fan Duel, are on the defensive after taking hits to their businesses in recent weeks as scrutiny by state policymakers across the country continues to intensify.
This week, it was disclosed that ESPN and Draft-Kings ended an exclusive advertising deal and Fan-Duel confirmed Wednesday it had laid off 55 workers in its Orlando, Florida office.
ESPN and Draft Kings declined to comment on the end of their partnership, which was announced last June and made Draft Kings the network’s official daily fantasy sports offering. But Draft Kings spokeswoman Sabrina Macias says the company isn’t retrenching.
“Our business position is strong and we have no intention to scale back any operations,” she said, pointing to the company’s official launch in the United Kingdom last week. “We’re continuing to innovate and learn.”
Fan Duel, meanwhile, said the layoffs are concentrated in the Florida office’s research and development division, which is being shuttered. The job cuts do not impact the rest of the office, which includes an expanding customer service operation, the company said.
Fan Duel CEO Nigel Eccles, in a brief call with The Associated Press, said the company, which has over 400 employees, is focused on making progress on the legislative front.
“What you’re seeing is an industry that’s very quickly going from an unregulated state to a regulated state,” he said. “Whenever you have that, there’s going to be turmoil.”
Macias, of Draft Kings, which has more than 350 workers, also downplayed the recent developments, highlighting instead the industry’s state- by- state efforts to secure legislation that would keep its games legal but regulated.
Nineteen states currently are considering bills to regulate the industry, inwhich players compete online for cash prizes by picking teams of real life athletes and racking up “fantasy” points based on how they perform. Another 14 states are expected to weigh legislation before the year is over, she said.
Of those with bills in play, California and Indiana have seen proposals clear at least one chamber of their legislature. Bills also have advanced out of legislative committees and are poised for consideration by the full chamber in Indiana, Virginia, Florida and Nebraska, Macias said.
“A couple of setbacks here and there do not necessarily reflect the larger picture,” she said. “There’s progress both on the legislative front and from the consumer protection perspective.” Some industry watchers aren’t convinced.
Daniel Wallach, a Florida lawyer who specializes in gambling and sports law, says recent developments may point to a slow unravelling of the daily fantasy sports genre.
“In some respects, this seems like death by a thousand cuts,” he said.
Media conglomerate 21st Century Fox said in a Securities and Exchange Commission filing on Monday that it was marking down the value of its $160 million investment in DRAFTKINGS by about 60 percent.
Last month, Vantiv, a payment processing company, said it would stop serving daily fantasy sports companies by the end of this month.
And banking giants Citigroup and Bank of America are blocking their New York customers fromplaying the contests because the attorney general in that state is seeking to shut down the industry.