Rookie Contract: The Demise of DraftKings and FanDuel

What we know: 

 From 2013 to 2014, Daily Fantasy Sports (DraftKings and FanDuel) saw participation increase by 847%. Increased participation has led to big money winners and large investments by corporations. On November 10th, New York Attorney General, Eric T. Schneiderman, released a Cease-and-Desist order against DFS (Daily Fantasy Sports). DraftKings and FanDuel filed suits against Eric T. Schneiderman, to prevent his ban on DFS on November 13th.

Nine years ago, the United States ordered the Unlawful Internet Gambling Enforcement Act of 2006, stating that “The Act prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.” A loophole is apparent as DFS are skill-based rather than luck. DraftKings and FanDuel both make this clear on their respective websites, social media platforms, and televisions advertisements.

I have no problem with New York State’s ruling against Daily Fantasy Sports. But if states believe that these enterprises do not violate the UIGEA of 2006, there should no further restriction. It should be at the discretion of the states to decide the fate of DFS.

One thing extremely shocking, is the fact that Nevada (America’s Most-Profitable Gambling State – $11 Billion in revenue in 2014) ruled against DFS. Unless gaming licenses are acquired by DraftKings or FanDuel, they are no longer able to operate in Nevada.

Who is at risk:

What to expect:

I don’t expect DFS going down without a fight. The Supreme Court will have to take their time, analyze DFS and determine how it shall be categorized. The only way that I see DFS staying afloat, is if they can apply for a gambling license in all fifty states. Skill-based or not, they’re providing a low-risk gambling system.

It’ll be interesting to see how these companies are perceived by states and the courts alike. This could become the biggest sports-business lawsuit since Ed O’Bannon  or the NFL Concussion Case.

 If you have any feedback or questions, feel free to message me on Twitter.