The unmitigated insanity that is the world of daily fantasy sports has taken yet another interesting turn. The two leading DFS operators — DraftKings and FanDuel — have seen numerous challenges over the last few months as states continue to examine whether or not the multi-billion dollar industry is a game of skill or an illegal gambling operation. But the newest court filing? It adds some new, but not completely unexpected parties to the mix; sports leagues.
The NBA, NHL, MLS and MLB were all added in a motion granted on Monday, joining DraftKings and FanDuel, under alleged claims of negligence, breach of contract, and RICO violations, among others.
The suit also names payment processors (PayPal, Paysafe, etc.) and media companies such as Time Warner (which owns TNT, TBS and Turner Sports) and Fox Sports as defendants. Notably, Dallas Cowboys owner Jerry Jones’ Legends Hospitality and New England Patriots owner Robert Kraft’s The Kraft Group were also added to the suit.
It all creates an additional layer of complexity for an industry that Eilers Research believes will generate more than $2.5 billion dollars this year, and grow to an almost $14.5 billion dollar industry by 2020.
Noticeably absent from the legal filings? The NFL.
Unlike the NBA, NHL and MLB, which have equity stakes in either DraftKings or FanDuel (FanDuel, DraftKings, and DraftKings, respectively), the NFL has taken a conservative approach when it comes to daily fantasy sports. While nearly every NFL team has signed a contract with one of the two major DFS-operators, the league had previously mandated that any DFS operator-team contract have a one-year opt-out provision. The league itself has yet to even hint at any contract negotiation with a major operator (let alone an equity share), even though the lion share of all DFS entry fees are generated from fantasy football. Goodell speaking on team agreements with FanDuel, and DFS as a whole, in April:
“This has been a source of a lot of discussion internally and also with our ownership and committees in making sure we understand that fans are doing this, but we do not want to cross the line we think is inappropriate and moving more towards something that we think is prohibitively gambling. That’s not the case here, but we are taking a cautious approach to it and making sure that we observe how it involves. Our involvement as clubs is very limited and preferably limited […] Our relationship is more limited to an advertising-driven relationship.”
It could be this cautiously optimistic approach that keeps the league out of the myriad DFS-lawsuits, at least for the time being. A cautious Goodell doubled-down on his DFS approach during a fan forum that was hosted prior to Sunday’s Minnesota Vikings/Green Bay Packers game”
[On DFS ruining the integrity of the game] “That’s my No. 1 concern , and that’s why we’ve opposed legalized gambling. Daily fantasy is different in this sense – It really would be difficult to have that quote-end-quote influence that we are worried about with gambling in general. So I’m less troubled on that front. But I also want to make sure our consumers, our fans, if you play something, I want to make sure there are proper consumer protections. That’s important for us and I think that’s something that is missing from the current structure.”
If anything can be gleaned from the various lawsuits and the differing statements from multiple state attorneys general across the country, it is that there is a murky, grey area surrounding the world of daily fantasy sports. The NFL’s approach appears to be one that, while not capitalizing on the revenue streams in the short term, may keep more money in their pockets in the months and years to come.
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