UPDATE: Fantasy Aces released a statement on Wednesday saying it “truly regrets to announce that we are unable to sustain our site and business operations.” The company claims to have spent “over a year attempting to secure long term capital” and “every waking minute attempting to find a solution for our players” but now found itself “left with an unresolvable financial burden.” The company claims that the site is “temporarily shuttered and all accounts are on hold” while it works with the bankruptcy court to find “the fastest possible solution for our players.”
On Wednesday, FantasyAlarm.com reported that Fantasy Aces had filed for Chapter 7 bankruptcy protection in a California bankruptcy court. The filing cites assets of $1.82m and liabilities of just under $3m – of which over $1.3m is player deposits – and indicates that “no funds will be available to unsecured creditors” after administrative expenses are paid.
News of the filing followed a confusing few days that began when rival DFS operator FantasyDraft confirmed earlier this week that its planned acquisition of Fantasy Aces – which was announced last Thursday – had fallen through due to “issues identified during our due diligence.”
The Fantasy Aces website, which had been dormant since the original acquisition announcement, switched its homepage to a black screen promising that an update was “coming shortly” but no further changes have been made. Trading in the company’s shares on the TSX Venture Exchange was suspended last week ahead of the acquisition announcement and remain suspended.
Prior to the acquisition announcement, Fantasy Aces players had taken to DFS forums to complain of slow-pay/no-pay issues. It appears that Fantasy Aces couldn’t honor withdrawal requests because it was dipping into player deposits to fund its operations, despite the site formerly claiming that player funds were “held in a segregated US bank account, separated from our operational accounts.”
Fantasy Aces was a member of the toothless Fantasy Sports Trade Association (FSTA), whose president Paul Charchian issued a statement on Tuesday declaring that the FSTA had suspended Fantasy Aces’ membership “pending resolution of the matter.”
Declaring that “the FSTA will not be a safe haven for operators who spend customer funds,” Charchian said that “if it turns out that Fantasy Aces spent their players’ funds, we strenuously condemn such action.” Which is all well and good, but the suspension amounts to bolting the door long after the cows have fled.
This isn’t the first time the FSTA has worn egg on its face due to its members failing to distinguish which bank accounts are theirs to spend. Last March, FantasyHub went belly-up, although its players were ultimately rescued when DFS giant DraftKings agreed to acquire FantasyHub’s player database and restore their account balances.
In January 2016, DFS operator FantasyUp also went dark and left players in the lurch. In this case, players were rescued by DFS turnkey platform provider iTEAM. It remains to be seen whether a white knight will ride to the rescue of Fantasy Aces’ players, although the bankruptcy filing makes such a step seriously unlikely.
The planned union of Fantasy Aces and FantasyDraft would have created the number three DFS site behind DraftKings and FanDuel (which are in the process of merging into a DFS behemoth).