In This Article:
For two years, DraftKings and FanDuel, the two leading “daily fantasy sports” companies, spent most of their time fighting legal battles with state attorneys general, and arguing that their fantasy contests did not constitute gambling. As recently as last fall, each company had to pay a $1.3 million “unfair and deceptive practices” fine in Massachusetts. Even today, there remain nine states where DraftKings and FanDuel don’t operate, because state law deems their fantasy contests illegal gambling.
And yet the companies are now focusing full-steam-ahead on gambling.
After the U.S. Supreme Court in May struck down PASPA, the federal law that prohibited states from legalizing sports betting, some states have scrambled to pass sports betting bills, and DraftKings and FanDuel have raced to set up shop along with them. Delaware and New Jersey moved quickly; both launched legal sports betting in June. West Virginia, Pennsylvania, and Rhode Island are next up; all have all passed sports betting bills and are expected to launch in the fall.
FanDuel was first out the gate in New Jersey, setting up a physical sportsbook at Meadowlands Racetrack. The operation opened on July 14 and took in just over $1 million in bets in the first weekend. (That’s “handle,” not revenue.) That number may look small, but Meadowlands chairman Jeff Gural told the website Legal Sports Report, “Our goal was to do over $1 million for the weekend.” It was a decent haul considering it opened during the slow days of summer for sports: apart from World Cup soccer, there was really only MLB and WNBA to bet on. Once the NFL season starts, action will get hot, especially since both the New York Giants and New York Jets play next door at MetLife Stadium.
FanDuel also has deals in place to open physical sportsbooks at The Greenbrier hotel in Charleston, West Virginia, and at Tioga Downs racetrack in New York, if and when New York passes sports betting.
FanDuel’s lead in the physical sportsbook race over DraftKings is thanks to having sold a majority stake to Irish betting giant Paddy Power Betfair in May, immediately after the SCOTUS decision came down. Paddy Power Betfair’s U.S. business, which includes FanDuel and another DFS app PPB bought last year, Draft, is now called FanDuel Group.
DraftKings, which launched four years later than FanDuel, eventually grew bigger than FanDuel in both user base and revenue—but interestingly, it is FanDuel that looks more formidable for the moment, as part of a much larger international gambling player. Many industry onlookers now wonder if DraftKings, too, will sell, rather than go public.