Sunday, October 25, 2015

Still Sick Sunday: Bench Warmers

Maybe you will play them:

"Small fantasy sports outfits are wary and feeling left out" by Callum Borchers Globe Staff  October 23, 2015

Matt Chatlin has mixed feelings about the firestorm engulfing DraftKings Inc. and FanDuel Inc.

On one hand, the investigations, subpoenas and suspicions aimed at the daily fantasy sports leaders could present an opportunity for his competing startup, OwnThePlay Inc., to capitalize. In fact, Chatlin has already added features in response to complaints about the player experience onDraftKings and FanDuel, and says entries are growing at a rate of 40 percent a week.

On the other hand, none of the state or federal regulators probing OwnThePlay’s larger rivals have contacted him, meaning Chatlin may not get a seat at the table when important decisions about his industry are made.

“I’m incredibly surprised that I haven’t been contacted, and I hate that I haven’t been asked,” said Chatlin, a former professional poker player. “I have very strong opinions about how to bring regulation to the Internet gaming space.”

Chatlin’s ambivalence typifies the mood of small-scale fantasy sports operators who have been mostly overlooked in the recent brouhaha over the legality and integrity of cash contests. Three others interviewed agreed that there are benefits as well as drawbacks. They will happily scoop up customers seeking alternatives and are glad to avoid FBI scrutiny, but they also worry about being left out of regulatory conversations.

Plus, what seemed like an unstoppable growth sector only one month ago now looks like a shaky bet. Fantasy sports startups that raised millions as DraftKings and FanDuel rocketed to billion-dollar valuations could struggle to secure additional funding.

“Any investor looking to invest in daily fantasy would certainly pause,” said David Geller, who raised $25 million in venture capital for his company, TopLine Game Labs LLC, maker of the DailyMVP fantasy app. “I think it would be very challenging to go out and raise a round for something like a DraftKings or FanDuel right now.”

The gap between DraftKings and FanDuel and everyone else is enormous. In contests based on last Sunday’s NFL games, DraftKings collected $22.9 million in entry fees, and FanDuel took in $19.9 million, according to fantasy data tracker SuperLobby. Yahoo! Inc. was a distant third, at $1.2 million, and no other company cracked $350,000.

Yet the fantasy sports pie is getting so big that more than a dozen other firms are vying for slices, handing out more money in prizes than they collect in fees, in hopes that players will get hooked, keep spending, and eventually yield profits.

Participation in fantasy sports contests of all kinds has grown 58 percent since 2011, according to the Fantasy Sports Trade Association. Roughly 57 million people in North America now play, and the fastest-growing segment is daily fantasy play.

The industry’s bright forecast turned cloudy in recent weeks. Federal investigators in Boston have subpoenaed DraftKings, which is also under review by Attorney General Maura Healey and the Massachusetts Gaming Commission.

Meanwhile, a deputy prosecutor in New Hampshire said Friday that Attorney General Joseph Foster’s office was aware of the controversy and was “looking at” daily fantasy sports, but declined to detail the review.

In Connecticut, a spokeswoman said Attorney General George Jepsen’s office and the state’s Department of Consumer Protection were jointly reviewing daily fantasy sports, to see whether companies such as DraftKings “have made reliable and accurate representations to consumers about the way they operate and whether adequate and transparent controls are in place to ensure fairness to Connecticut consumers.”


Honestly, I'm getting bored by the story. Sorry.

"State officials take hard look at fantasy sports sites; User safeguards, legality of games among issues" by Dan Adams and Callum Borchers Globe Correspondent and Globe Staff

Massachusetts legislative leaders and gambling regulators signaled Wednesday that state oversight of the embattled fantasy sports industry is increasingly likely, saying they would scrutinize the operations of companies such as Boston’s DraftKings Inc. with an eye toward safeguarding consumers.

That means getting their cut; they don't care about you!

The Massachusetts Gaming Commission launched a far-reaching review of the legal and regulatory issues posed by the “meteoric emergence of online fantasy sports,” the agency said, including the basic question of whether the games are allowed under state law.

Chairman Steve Crosby said he and the four other commissioners would discuss whether fantasy sports are legal, whether they should be regulated, and if so, who should regulate the companies, and how.

The commission will discuss the issues at its next public meeting, on Oct. 29, as other states also step up their scrutiny of fantasy sports games.

“We do have a tremendous amount of experience in introducing a new industry, thinking about licensing issues and criteria, and what variables need to be regulated,” said Crosby, whose commission also oversees the state’s new casinos. “We feel like it would irresponsible not to weigh in.”

Attorney General Maura Healey is conducting a similar review, and her findings, as well as those from the gambling commission, will probably guide the Legislature as it considers whether to require DraftKings and its competitors to submit to state oversight and inspection, House Speaker Robert A. DeLeo said.

After a surge in popularity and an advertising blitz, the fantasy sports companies are suddenly reeling from an onslaught of unwelcome developments. The industry is under investigation by federal authorities in three states, and public officials and some players have raised questions about the fairness of the games.

The fast-moving events have raised a host of questions that policy makers on Beacon Hill have been struggling to answer.

Healey has said her office is reviewing the advertising practices of daily fantasy sports companies, whether they adequately disclose to customers the risks of playing, whether they pay appropriate taxes, and whether the games are fair.

In an interview, Crosby said the gambling commission is unlikely to challenge Healey’s statement that daily fantasy sports can continue operating in Massachusetts even amid the legal uncertainty.

The commission was formed to manage the start of casino gambling in Massachusetts, which was legalized in 2011. Legislators have said that gambling law never contemplated daily fantasy sports.

One proposal kicking around Beacon Hill is for the Massachusetts Lottery to run fantasy sports contests. That’s how it works in Montana. But Governor Charlie Baker has said he doesn’t like the idea.

The FBI and US attorneys in Boston, Manhattan, and Tampa, Fla., are reportedly investigating the online fantasy sports industry, while several members of Congress are calling for hearings.

The office of federal prosecutor Preet Bharara in New York has issued a subpoena to DraftKings, searching for details about the potential use of inside information, The Wall Street Journal reported Wednesday, citing people briefed on the case. Bharara is known for effectively shutting down much of the online poker industry in the United States in 2011....


The bu$ine$$ is not yet profitable?

"NFL teams may cut ties to fantasy sites amid inquiries" by Callum Borchers, Shelley Murphy and Dan Adams Globe Staff and Globe Correspondent  October 22, 2015

The US attorney’s office in Boston has subpoenaed DraftKings Inc., seeking information about whether one of its employees had inside information that helped him win a fantasy sports contest on a competitor’s site, according to two people familiar with the federal investigation.

The inquiry is examining whether fantasy sports operators violate federal law — and, more specifically, whether Ethan Haskell, the DraftKings employee who won $350,000 in a FanDuel Inc. contest, took advantage of nonpublic information, according to the people.

The US attorney’s office in the Southern District of New York has subpoenaed the company seeking similar information, those people said. It’s unclear whether the two offices will conduct simultaneous investigations, or if one will eventually take the lead.

Haskell’s attorney, Mark E. Robinson of the law firm Mintz Levin, declined to comment.

DraftKings did not immediately respond to a request for comment. On Monday, the company said an investigation it commissioned by John Pappalardo, a former US attorney for Massachusetts, found that Haskell did not have inside information when he submitted his winning NFL fantasy lineup to FanDuel.

The offices of Preet Bharara, the US attorney in the Southern District of New York, and Carmen Ortiz, the US attorney in Boston, declined to comment.

The new development in the Boston investigation comes as DraftKings and FanDuel have been forced to cancel VIP events in Las Vegas, after Nevada gambling regulators ruled last week that the companies’ contests are a form of gambling that require a state license to operate.

The firms are also facing the prospect of losing NFL sponsorships if states evaluating the legality of fantasy sports cash games determine they violate gambling laws.

Marketing deals with NFL clubs have been an integral part of both companies’ attempts at mainstream appeal this football season. On touchdown runs and in postgame interviews, company logos are often visible in the background, plastered on stadium walls.

At Gillette Stadium in Foxborough, for instance, and in the home arenas of the Dallas Cowboys and Kansas City Chiefs, fans eat and drink — and track fantasy statistics on big-screen TVs — in DraftKings-branded sports bars.

One place where such partnerships could be in jeopardy is Florida, where the Miami Dolphins now say they may have to end a business relationship with Boston-based DraftKings.

“We would need to consider all of our options, including termination, if their business model is deemed to be unlawful,” the Dolphins said in a statement.

Meanwhile the Wynn Las Vegas resort and casino has told DraftKings to find a new location for the semifinal round of its “Fantasy Football World Championship,” which had been planned for Dec. 17-21. With a $15 million purse and a $5 million top prize, the event was billed by DraftKings as “the biggest fantasy contest of all time” and had been in the works for four months, according to Wynn.

A spokesman for Wynn said the casino company told DraftKings on Oct. 15 that it could not host the event.

That was the same day the Nevada Gaming Control Board ruled that such contests constitute gambling under that state’s laws and therefore require licenses.

DraftKings and FanDuel, which have rejected the gambling label, said they would not seek licenses and have stopped accepting entries from Nevada in all of their contests.

DraftKings “received communication from us as soon as the commission made its decision,” Wynn spokesman Michael Weaver said Thursday. “We can’t work with them in Nevada.”

A DraftKings spokeswoman said its contest will be moved to San Diego but would not name the venue.

The final round for 10 top players is slated for January in Los Angeles.

New York-based FanDuel said on its website that it, too, is looking for a new venue for its own fantasy football championship, which had been scheduled to take place Dec. 13 at the Cosmopolitan of Las Vegas casino resort.

That contest has a $13 million prize pool and will award $3 million to the winner. The Cosmopolitan declined to comment, and FanDuel did not respond to a Globe inquiry.

The parties have been ruined!

After surging in popularity amid an aggressive advertising push, both fantasy companies became mired in controversy over the past month. Their largely unregulated industry is under investigation by federal authorities in three states, and public officials and some players have raised questions about the fairness of the games after the Haskell incident.

In Massachusetts, Attorney General Maura Healey and the Massachusetts Gaming Commission are reviewing fantasy sports, and House Speaker Robert A. DeLeo said this week that the Legislature would likely take up a bill spelling out regulation of cash contests.

Asked Thursday whether daily fantasy sports companies should be regulated, Governor Charlie Baker said his focus was on consumer protection.

“I want to make sure that if you’re playing one of these games, you are playing the game based on the best available data and that you are on what I would call . . . a level playing field,” Baker said. “Information is really power when it comes to this particular endeavor.”

In daily fantasy sports, users assemble imaginary rosters of real-world athletes, and are awarded points based on how those athletes perform in games.

Expert players use sophisticated computer programs to pick athletes, and some have expressed concern that employees of fantasy sports companies could unfairly use nonpublic data to make more accurate predictions.

Both FanDuel and DraftKings recently banned their workers from playing in each other’s contests.

Twenty-nine of the NFL’s 32 clubs have advertising contracts with fantasy sports operators. DraftKings has deals with 12, FanDuel has 16, and Yahoo! Inc. has one.

The three teams that do not have fantasy deals — the Seattle Seahawks, New Orleans Saints, and Arizona Cardinals — are based in states where the contests are illegal. All three teams said state laws are the reason why they have not signed on with fantasy sports firms.

NFL spokesman Brian McCarthy stopped short of saying the league would order clubs to void their deals in the event of a legal status change. But he made the league’s expectation clear: “Teams have to follow local, state laws,” he said.


Also seeDraftKings bodes ill for glitzy casinos

Well, time got away from me and I will be missing some basketball if not skipping it altogether before Sunday football starts. Time to bench myself.