UPDATE: New York Supreme Court Justice Manuel Mendez has rejected the DFS operators’ applications for temporary restraining orders against New York Attorney General Eric Schneiderman’s C&D order. The operators will now have to wait until a Nov. 25 court hearing to plead their case.
DraftKings said it would continue operating in the state based on its claim that Schneiderman had promised not to take any action against the sites or their payment processing partners in the interim. However, a spokesman for the AG’s office disputed this claim, saying a lawsuit would be filed “in the next few days.”
In a separate action, the Boston Globe reported that a Massachusetts judge has issued a restraining order preventing payment processors Vantiv and Optimal Payments from refusing to process DFS transactions in New York state. DraftKings and FanDuel sued the companies on Friday, claiming that the payment firms are under contract to process DFS payments until 2017 and DraftKings claimed being cut off from its New York customers would “massively disrupt” its operations.
Speaking of massive disruptions, the Wall Street Journal reported on Monday that DraftKings had asked TV networks to defer some ads it had booked for Q4 until Q1. DraftKings has also reportedly sought to pay its advertising tab within 120 days of the ads airing, rather than the stipulated 60-day window, suggesting the company’s barrel must be getting pretty empty indeed since its latest round of venture capital funding had to be scuttled due to the ongoing controversy.
Daily fantasy sports operators reported their fifth straight week of declining activity levels following yet another week of legal controversy.
Week 10 of the National Football League season saw DFS participation drop across the board after New York’s Attorney General formally accused DraftKings and FanDuel of being illegal gambling operators and gave them five business days to exit the market.
FanDuel has announced it will stop serving New York players as of this week while DraftKings has stopped accepting new deposits from New York players, although both sites remained accessible to players for this weekend’s contests.
According to data compiled by the DFS analysts at SuperLobby, FanDuel reported a $1.15m decline in its NFL guaranteed prize pool (GPP) entry fees from Week 9’s $18.3m, while DraftKings’ GPP fees fell $1.7m to $20.4m. Despite the drops, FanDuel’s $3m Sunday Million exceeded its guarantee by $400k while DraftKings took in $700k more than its $5m Millionaire Maker had guaranteed.
All told, DraftKings’ GPPs took in nearly $2.4m more than they paid out for an effective margin of 11.5% in Week 10, while FanDuel’s margin (which includes cash games in addition to GPP) came to 10%. Both figures are improvements over Week 9, thanks mainly to reductions in the guaranteed payouts for their marquee NFL contests, which are now guaranteeing just 50% of their Week 1 totals.
FanDuel says it will further chop its Sunday Million guarantee by $500k to $2.5m for Week 11, while cutting the first prize payday from $500k to $300k. DraftKings says it will maintain its $5m guarantee for Week 11.
Third-place operator Yahoo saw its GPP fees fall 9% to $907k, the fifth straight week of declines since its Oct. 11 peak of $1.31m. Total entries numbered 142k, down from 192k on Oct. 11 and marking a new record low for the site. Despite posting an $80k overlay in Week 10, Yahoo has opted to maintain the $350k guarantee for its marquee Sunday Baller contest in Week 11.
NEW YORK LEGISLATION WOULD OFFER DFS CARVEOUT
On Monday, both DraftKings and FanDuel filed for temporary restraining orders to prevent New York AG Eric Schneiderman from enforcing his cease & desist order, which takes effect on Tuesday. Hearings on the TRO applications will be held on Monday afternoon.
The TROs seek to expedite judicial review to minimize the fallout from lack of access to the New York market. On Monday, a FanDuel spokesman said that the site was three days behind in paying players who’d requested withdrawals by check, and two days behind withdrawal requests via Paypal. FanDuel said the delay was due to new identification verification procedures and not due to any flood of New York players taking their money off the site.
On Friday, Schneiderman suggested that DraftKings and FanDuel’s “phalanx of lawyers” were furiously lobbying state legislators to introduce legislation that would offer DFS an exemption from state gambling law. Such lobbying appears to be paying off, as Monday saw the filing of a new DFS bill in the state senate.
SB 6092, which was filed by state Sen. Michael Ranzenhofer, seeks to exclude “participation in any fantasy or simulation sports game or educational game or contest meeting certain conditions from the definition of “contest of chance”. But with the legislature not due to reconvene until January, Ranzenhofer’s cavalry won’t arrive as fast as DFS operators would prefer.
GEORGIA ATTORNEY GENERAL LOOKING AT DFS
In other developments, the Attorney General for the state of Georgia appears poised to follow the lead of his New York counterpart. On Sunday, Sam Olens told the Augusta Chronicle that his office was investigating whether DFS operators were violating state gambling laws.
Georgia law defines wagering as any “agreement dependent on chance” in which a participant “stands to win or lose something of value.” The prohibition applies regardless of whether a degree of skill might affect the ability to win said wager.
Georgia is one of the few US states that doesn’t allow casino gambling and the few legal gambling options available to state residents flow through the Georgia Lottery. Last month, Lottery officials sent letters to both DraftKings and FanDuel advising them that their operations in the state appeared to be illegal.
IT’S NOT TELEVISION, IT’S HBO WITH OUR BECKY LIGGERO
Finally, Sunday’s broadcast of HBO’s Last Week Tonight with John Oliver delivered a detailed and hilarious takedown of the DFS brouhaha (viewable below), with particular emphasis on the DFS operators’ insistence on sticking to their ‘skill game’ mantra, regardless of this argument’s ever-decreasing lack of traction.
Featured prominently in Oliver’s rant was a 2014 interview of DraftKings CEO Jason Robins conducted by CalvinAyre.com’s own Rebecca Liggero. Our Becks is currently prowling the floor of the Malta iGaming Seminar, so if you’re around, be sure to buy her a drink and ask her about rumors that she’s set to join the cast of HBO’s Girls.
