BUSINESS

FanDuel $186M loss alarms auditors anew

TAGs: daily fantasy sports, fanduel

The latest financial data of daily fantasy sports giant FanDuel has auditors fearing that the firm is heading down the drain.

FanDuel $186M loss alarms auditors anewInsider.co.uk reported that FanDuel booked a $186 million pre-tax loss for the six months to December 2015 as higher finance, legal and marketing costs outweighed lower than expected revenues.

This alarmed auditors from Deloitte as they believe that the company may not be able to fully bridge the potential gap with only $19.5 million of cash on the balance sheet.

FanDuel and several other daily fantasy sports (DFS) operators – including rival DraftKings – have faced numerous legal battles, particularly in the United States. Both FanDuel and DraftKings spent ridiculous amounts of money to get state regulators off their backs.

At present, there are only 16 states that have formally authorized DFS within their borders. The DFS regulatory issue in the US forced FanDuel to stop operations in several jurisdictions, bringing the number of state operations to 40 in 2015 from 45 in 2014.

Meanwhile, data filed with UK’s Company House showed that FanDuel’s revenue for the final six months of 2015 was at $64.4 million, down from $87.7 million for the prior 18-month period.

FanDuel’s $49.8 million gross profit in the period was dwarfed by its $336.3 million administrative expenses. Operating losses, on the other hand, grew to $286.4 million (£215.3 million) from $77.7 million (£58.4 million) for the previous 18-month financial period.

While FanDuel has yet to disclose its financial data for 2016, auditors urged FanDuel to take several measures that will help improve its liquidity position, including further reduction of their expenditures.

FanDuel and DraftKings have earlier planned to merge their companies but abandoned the idea in the wake of efforts by the Federal Trade Commission (FTC) to block the union due to concerns over decreased competition in the US DFS market.

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