FanDuel applies for UK gambling license; DFS cash games usurping prize pools

TAGs: daily fantasy sports, fanduel, Indiana, Nigel Eccles, UK Gambling Commission, washington

fanduel-uk-gambling-licenseDaily fantasy sports operator FanDuel has applied for a UK gambling license.

FanDuel is based in Edinburgh but currently only conducts DFS operations in the US and Canada. But with US regulators, legislators and law enforcement agencies all clamoring for tighter control over (and possible taxation of) the DFS industry, geographical diversification seems like a pretty smart idea.

FanDuel CEO Nigel Eccles told Bloomberg that the company hopes to launch its UK-facing site sometime next year. Eccles said DFS’s potential international appeal remained “unknown” but said the company’s plan was to “test the waters,” as “everyone needs to prove that there is a market outside the US.”

Of course, much of DFS’ appeal in North America lies in the lack of legal sports betting options, which are readily available throughout much of Europe. Eccles suggested the UK site could offer something completely different from the North American product, having told his people “come to me with a skill-based product in the UK that you think will work.”

FanDuel’s archrival DraftKings received its UK gambling license in August and has vowed to launch the site before the end of the year. DraftKings also acquired a pool betting license, a service provider designation, something FanDuel hasn’t yet expressed an eagerness to acquire.

In August, current DFS third-place operator Yahoo announced it had teamed with UK-licensed fantasy football outfit Mondogoal on a UK-facing joint venture. Mondogoal offered some insight into the hit DFS operators could expect to take from a regulated market, saying it pays 15% of gross revenue in taxes while regulatory compliance accounts for 20% of its expenses.

Friday saw DFS number crunchers release its midseason NFL report on DFS operator performance. The figures are skewed by the fact that FanDuel’s numbers include both guaranteed prize pools (GPP) and cash games, while cash game info for DraftKings isn’t included.

Looking specifically at FanDuel’s numbers, the report shows 63% of NFL Week 2 revenue coming from GPP, while last weekend’s GPP share was down to 47%, the second consecutive week in which cash games generated the bulk of FanDuel’s revenue.

It’s worth noting that FanDuel has reduced the money in its marquee NFL GPP from $5m at the start of the season to $3m for this coming weekend’s action. Whether that reduction is driving players away from GPP or simply represents FanDuel’s response to shifting player preferences remains to be seen.

Washington is one of the original five US states in which DFS play is expressly prohibited but the ubiquity of DFS television advertising has apparently left many state residents wondering why they can’t play. On Nov. 12, the Washington State Gambling Commission is holding a meeting at which it promises to explain (among other things) “why Fantasy Sports is not legal in Washington State.”

On Nov. 20, Washington state Sen. Michael Baumgartner, who chairs the Commerce and Labor Committee, will hold his own hearing to discuss “proposals allowing operators of fantasy sports games to offer prize money.” Baumgartner said that “thousands” of state residents were playing on DFS sites in violation of the law and “when so many people ignore a law, we ought to recognize there’s a problem with it.”

A bill that would have classified DFS as a skill game, thereby making it a legal activity in Washington, was introduced in the state senate earlier this year but failed to advance out of Baumgartner’s committee.

Indiana state Rep. Alan Morrison announced this week that he’s drafting legislation to regulate and tax DFS while restricting DFS operation to the state’s licensed casinos, which would be allowed to strike partnerships with DFS operators, similar to what Pennsylvania has proposed.

Morrison told the Goshen News that the state’s other gambling operators had learned to accept regulation and “for another entity to come in and play by a separate set of rules isn’t fair.” Morrison’s legislation won’t appear until next year but he’s already won the cautious support of state Sen. Luke Kenley, who said “it seems appropriate” for DFS operators to be taxed like any other gaming business.

Morrison had filed a different DFS bill back in January, along with legislation to authorize legal sports betting, but neither bill made much headway. A DFS lobbyist said Morrison’s proposal to require DFS operators to partner with casinos was “tantamount to a ban” and would likely cause DFS operators to pull out of Indiana.


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