On Wednesday, Forbes’ Maury Brown quoted sources at FanDuel saying a senior exec had announced the layoffs to staff at the company’s New York offices. The scale of the cutbacks has not been publicly confirmed. The news follows rival DraftKings’ recent decision to look for a way out of the pricey New York office lease it signed last June.
The layoffs come just one day after Texas state Attorney General Ken Paxton became the latest to declare DFS to be illegal gambling. While DraftKings immediately stated its intention to continue serving the Texas market, FanDuel’s statement hedged on whether it planned to exit Texas, which reportedly accounts for up to 8% of all DFS entry fees.
At least one DFS operator’s concern over their increasingly insecure legal situation is borne out in federal lobbying disclosure forms. While FanDuel’s $20k federal lobbying budget was unchanged from Q3 to Q4, DraftKings’ expenditure rose from $10k in Q3 to $80k in Q4.
FanDuel’s layoffs coincide with the end of the NFL season, which remains the DFS cash cow. Year-end stats issued by the DFS analysts at SuperLobby.com showed total entry fees for NFL guaranteed prize pools (GPP) at $770m, nearly 42% of the total $1.85b DFS operators generated across all sports in 2015. The NFL accounted for $75m of DFS operators’ GPP revenue compared to $91m for all other sports combined.
National Basketball Association GPP fees ranked well behind the NFL at $456m, while Major League Baseball placed third with $413m. All other sports – golf, hockey, college football and basketball, soccer, NASCAR, mixed martial arts and eSports – generated a combined $210m in GPP entry fees last year.