Daily Fantasy Sports Landscape Cloudy After Supreme Court Enables States to Legalize Sports Betting
With the dust starting to settle a bit from the Supreme Court’s decision to enable states the choice to legalize sports gambling, there is still much unknown about how the daily fantasy sports industry (DFS) will be affected.
The Supreme Court failed to specify if the sports betting landscape would be subject to federal regulation or if it would be up to each state to regulate. The big players in DFS, DraftKings and FanDuel, have been fighting for their product at a state level for a few years.
Recent Separation of Major Sports Leagues from DFS Concerning
Major League Baseball and the National Basketball Association want to remain partners but shed ownership stakes in daily fantasy sports giants FanDuel(FD) and DraftKings(DK). No financial terms or other pertinent information has been released at this time.
MLB released a statement saying, “While we have initiated discussions regarding potential changes to the structure of our relationship, we look forward to continuing our valued partnership with DraftKings. MLB and DraftKings will continue to collaborate on innovative approaches to enhance the fan experience.”
NBA spokesman Mike Bass similarly added, “This space is evolving and we saw the need to take a fresh look at the structure of our relationship. FanDuel has been, and will remain, a great partner. We have simply modified some of the components of our partnership.”
FanDuel’s released a brief statement, “FanDuel and the NBA will remain close commercial partners.”
DraftKings spokesman went a little more in depth, “Major League Baseball was the first professional league to invest in DraftKings and their partnership over the last five years has been instrumental to our growth and success. Our ties to MLB are as strong as they have ever been.”
Could MLB and the NBA’s recent move been a foreshadowing of the Supreme Court’s decision to put sports gambling in the hands of individual states? MLB and the NBA have a great opportunity to individualize a sports betting product with each team and their respective stadium. Shedding ownership in DK and FD is the first step in creating their own DFS entity and taking a micro approach to change the landscape of sports betting as it is currently constituted today.
The “Empty Space” DFS Filled for Sports Gambling Consumers is Gone
While most agree that DFS is a form of sports betting, it has been legal in most states since its conception. The Unlawful Internet Gambling and Enforcement Act of 2006 (UIEGA), there is a mouthful, bans online poker games and other games of chance, but views DFS as a game of skill more than luck and doesn’t consider it comparable to other banned betting activities. The DFS industry has taken full advantage of this Act and has battled states, courts, and the government to keep their product available to as many states as possible.
For the past few years, DFS has been teetering on the edge of being a game of skill or a game of chance. But the fact that they kept their product legal in most states allowed sports gamblers to participate and get their fix in the industry. With the recent decision to give each state the power to control sports gambling, the niche DFS had is now gone. The options for sports betters will be plentiful and DFS will lose players as there will be new options for consumers to play.
DFS Could Benefit and Thrive
DraftKings has been proactive in their effort to provide sports betting and has the resources in place to move forward. FanDuel hasn’t confirmed if they have been working a sports betting angle, but smart money says they have.
But say FanDuel hasn’t, a move both DK and FD can make is to merge into a DFS giant combing resources and funding to create a super product. While they have tried to unsuccessfully merge before, the new sports betting landscape may push them to find common ground and get the deal done.
However, a merger is worrying DFS players who enjoy the different platforms that FD and DK offer. Both sites have different amounts of players and positions which leads to different strategies for each site to be successful and win money. What will happen if FD and DK merge? Will the games offered remain unique or will they be lumped into one or the others style? With the new options available for sports betting consumers, would enough frustrated players jump ship to new options and leave FD and DK reeling? Definitely more questions than answers at this time.