When states started banning daily fantasy sites and the lawsuits started flying, many thought the days of DraftKings and FanDuel were numbered. But it might not be so simple. Because it's not just the websites themselves that are after your sports gambling dollars -- it's also the sports leagues and media conglomerates that have invested in and partnered with the sites.
And as several recent lawsuits against daily fantasy sites have shown, those investors and partners are getting dragged into court as well.
Who Has a Stake?
As DraftKings and FanDuel have been waging an ad war for daily fantasy customers, media companies and the sports on which the bets are based have been jockeying for a piece of the pie:
- DraftKings is backed by Major League Baseball and Fox Sports, among others, and has exclusive partnership agreements with ESPN and the National Hockey League; and
- FanDuel has received funding from Comcast and NBC Sports, and has partnership agreements with the National Basketball Association, 14 NBA teams and 16 NFL teams.
The pie is substantial -- it's estimated that fantasy sports are a $2 billion per year industry, and only getting bigger. And these partnerships matter. Access to advertising on major networks during the recent media blitz has been crucial and athletes have sued sites that aren't partners with their leagues.
Pulling Up Stakes?
With more and more states classifying daily fantasy as gambling, leagues and media companies may start second-guessing their involvement. Although fantasy sports have been deemed legal under the federal Unlawful Internet Gambling Enforcement Act (UIGEA), seven states have outlawed DraftKings and FanDuel under state gambling laws.
And now an expansive class action lawsuit against the two sites in Florida is naming everyone from investment banks to online payment processors. It's possible that the sports leagues and media companies backing DraftKings and FanDuel will begin to wonder whether their bet on daily fantasy will pay off.
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Related Resources:
- The NBA, Turner Sports, Visa, PayPal, Others Face Lawsuit Over Daily Fantasy Sports (Venture Beat)
- State Gambling & Lottery Law (FindLaw)
- The End of (Unregulated) Daily Fantasy? (FindLaw's Tarnished Twenty)
- Should the U.S. Legalize Sports Gambling? (FindLaw's Tarnished Twenty)
