DFS - New York

[Gekko]

FanDuel and DraftKings have reached a settlement with the office of the New York attorney general Eric Schneiderman following a months-long legal saga.

The settlement will see the sites stop operating in New York until September, pending legislation that would otherwise allow them to. September is when the primary appeal regarding the legality of DFS in New York is scheduled to be heard.

[Cocktails and Dreams]

Meanwhile, the FSTA continues to throw full season under the bus. Like I have said all along. The FSTA is a complete joke.

[Philly High Hopes]

Greg/Tom - Please tell us there are people lobbying on behalf of the NFBC and season long leagues/contest.

[Greg Ambrosius]

Greg/Tom - Please tell us there are people lobbying on behalf of the NFBC and season long leagues/contest.

I don't believe anyone is lobbying on behalf of season-long, nor would it do any good. These legislators think that DFS is a pot of gold and they are passing bills without any knowledge of our industry. In fact, they are creating a monopolistic industry with their so-called "consumer protection" DFS bills. It's getting downright scary that legislators could actually pass bills without knowing anything about the consequences of their actions on millions of people.

Virginia is a perfect example. They wanted to be first out of the gate to legalize Daily Fantasy Sports, so they passed a bill that didn't just say DFS; it says all pay fantasy games. The bill was signed by the governor and goes into effect July 1st. The lobbying efforts concentrated on getting a legal state for DFS and the legislators had no desire to help out the small business operators. But by including all pay-to-play games in this bill and asking for a $50,000 licensing fee just to include Virginia residents they have now made Virginia a state where season-long game operators may have to leave and where only 2 or 3 DFS companies can stay. Companies like Fanduel and Draft Kings -- which helped lead the lobbying efforts -- now basically can buy out their competition in that state for a mere $50,000. Nobody else can pay that and Virginia will have a legal DFS state, but only for DFS and likely only with FD and DK.

Now how dumb is that? The simple solution would be to identify which pay games they were hoping to regulate (seems like DFS) with one more line in the bill that excluded season-long or small game operators. And the second solution was a sliding scale based on revenue, not a crazy one-time licensing fee that knocks out 98% of the competition. It's so insanely not thought out that it's surprising that Virginia residents aren't contacting their Governor and legislators now. They have killed small business, hurt their residents, and emboldened the two companies that brought all this negative attention to the industry. They aren't hurting DK and FD, they are making them more powerful in Virginia than ever before.

The hope is that the FSTA or someone else can convince Virginia to amend this bill by July 1st with a simple line that defines who they are trying to include in this legislation. That's the hope from us and others in the pay-to-play space. We'll see if it happens, but we need your help to let the folks who passed this bill know that they did a very, very bad job.

As for New York, I believe they are asking for a $500,000 licensing fee for DFS companies. They are definitely not including season-long in this new bill, but again the $500,000 licensing fee excludes everyone but two companies. Even Yahoo has said they wouldn't operate there under those terms, I believe. I mean, again, the Attorney General thinks he's corralling the top two DFS companies when in fact with this barrier to entry he would be giving the entire state to those same two companies. They would gladly pay any fee like that to wipe out all of the competition in the state of New York. Is anyone involved with these bills seeing the irony of all this?

We'll see what happens, but it's a pure money grab for the states and a win-win for those same DFS companies. It's a lose for consumers and for all other competitors in the DFS space. Hopefully we can get states like Missouri, Illinois, Minnesota and Wisconsin to pass DFS bills without any one-time fees and move forward. It's just a total shame what is going on, but the industry brought this on themselves in so many ways. Don't get me started. I've been doing this professionally for 27 years and some folks thought more of themselves than the good of the industry, and we're all paying the consequences now. Let's see how this plays out, but the current legislative actions aren't positive from what I'm seeing.

[Bronx Yankees]

As for New York, I believe they are asking for a $500,000 licensing fee for DFS companies. They are definitely not including season-long in this new bill, but again the $500,000 licensing fee excludes everyone but two companies. Even Yahoo has said they wouldn't operate there under those terms, I believe. I mean, again, the Attorney General thinks he's corralling the top two DFS companies when in fact with this barrier to entry he would be giving the entire state to those same two companies. They would gladly pay any fee like that to wipe out all of the competition in the state of New York. Is anyone involved with these bills seeing the irony of all this?

Greg - DFS does not really interest me, but I agree with your perspective. As for New York, sadly, the State's general approach is to tax anything and everything that breathes or realizes revenues of any type. Then, the Legislators wonder why New York consistently ranks at or near the bottom in places to conduct business and is losing population (and jobs) compared to most other states. My work periodically causes me to see how proposed and enacted legislation is drafted. Whatever you might imagine in your most cynical frame of mind probably would not come close to capturing the lunacy and sleaziness of the actual process.

Mike

[Gekko]

Hey mike. PM me your cell phone number. Thanks

[Cocktails and Dreams]

Greg: You are asleep at the wheel here. You just said that you hope that the FSTA is going to convince Virginia to amend the law in Virginia? News flash. They are the ones that got the lobbyists together to have these regulatory fees put in place in the first place. The sure as hell are not going to fight for full season fantasy sports. They couldn't care less. Just like they couldn't have cared less about anything else of importance over the years. The only thing they cared about was a circle jerk of awards and now whatever is best for draftkings and fanduel. They have always had an agenda that does the fantasy player no good whatsoever. While not caring about the WCOFF and other companies stiffing was pretty ugly to watch, this is even worse. Scum of the earth organization IMO.

[Greg Ambrosius]

Greg: You are asleep at the wheel here. You just said that you hope that the FSTA is going to convince Virginia to amend the law in Virginia? News flash. They are the ones that got the lobbyists together to have these regulatory fees put in place in the first place. The sure as hell are not going to fight for full season fantasy sports. They couldn't care less. Just like they couldn't have cared less about anything else of importance over the years. The only thing they cared about was a circle jerk of awards and now whatever is best for draftkings and fanduel. They have always had an agenda that does the fantasy player no good whatsoever. While not caring about the WCOFF and other companies stiffing was pretty ugly to watch, this is even worse. Scum of the earth organization IMO.

I've been called a lot of things during my 27 years in this industry, but asleep at the wheel has never been one of them. Chad, you're a bright guy, but I think you underestimate others around here too much. I know exactly what is going on within the FSTA, within these DFS companies and within the small business space. It pains me to have to agree with you on some points and it pains me to see the divide that is taking place among businesses right now. I was a founding member of the FSTA, I created the Fantasy Sports Trade Conference and I was one of many on the FSTA board at the time when we had no money who supported CDM Fantasy Sports with an amicus brief to show the judges in St. Louis that this decision was going to affect more than just one small company. It was a life-changing decision that went in our favor and honestly saved the industry from one entity really controlling everything in the fantasy baseball space.

Unfortunately, as much as I wish the FSTA or any other organization could change the direction that DFS is on with the state Attorney Generals and state legislators, it's not going to happen. The states see all of the advertising for DFS and are deciding it's an easy money grab. And if two companies pay 50 different states whatever they ask for, it will be beyond anything the FSTA, me, you or anyone else can do. The states will take the money and won't care about season-long or small game operators or even their own residents. They will have plugged a financial hole for the time being and will be happy about that.

The FSTA is guilty of several wrongdoings throughout all of this and I'll take the blame for not stepping up when I could have this summer as an active board member. We all saw this coming, we all voiced our opinions and we all could see the snowball occurring in October. By then we were all steamrolled in the snowball. What a shame.

No, the FSTA isn't going to be able to change Virginia's law or Indiana's law or New York's law. It was a pipedream that the lobbyists who thought that was a good idea could intervene and show how it wasn't a perfect law. I'm hopeful that Virginia residents can make their voices heard. Maybe not.

As for the WCOFF, there's plenty of blame to go around, moreso toward two dumb owners and admiring players than the FSTA. No trade organization could have prevented a company that had paid all prizes for 10 straight years from scimming $1.5 million from the industry. Of that total, more than half of it was money left on the accounts by the players to WCOFF for the next season, either trusting those owners or avoiding taxes. It was stupid for anyone who had concerns not to take their prize money at the end of each year. And in fact, when there was concern about WCOFF defaulting on prizes they paid you some of your baseball winnings to make it look like all was good. They couldn't afford to have you unpaid or the word would get out, but the NFL strike created a run on the bank and the bank was empty. No trade organization could have stepped in to prevent that nor could they have gotten any of the money back. Two owners had already spent it on Randy Moss and other expenses. Crazy.

It's really a good industry with good people, even someone like me. But the money is just too big right now. Too many people care only about their current investments. It's a very different day than the one when we all supported CDM, we all tried to grow the industry together and we all competed fairly against each other. Much different.

[BK METS]

The problem with the Virginia law is, on the surface and how it was marketed through the media, fantasy sports won and will be legal in Virginia. I even saw many articles where season long fantasy was not even mentioned. I really believe many regular folks in Virginia, who play season long fantasy sports, have no idea that they will likely not be able to play their regular games, because of this law.

My point is, it was plastered through the media as "Virginia signs into law first ever fantasy sports legislation" and the meat of the articles spoke about how FD and DK will be allowed to operate with a fee... but the small print kills the season long industry in Virginia, and probably effects millions more people with season long fantasy, than those that play DFS.

[King of Queens]

http://www.fantasyalarm.com/feature_item.php?id=24754

An interesting take on these developments.

[TOXIC ASSETS]

Bottom line:
The times they are changing. Crazy.

As a consultant I have to chime in here..... NFBC and NFFC are moving into uncharted waters at this stage, and are going to have to adapt to the new landscape. If too many more states follow Virginia's lead... it's game over. Maybe you'll see STATS start offing some DFS games. That would not surprise me in the least.

[Greg Ambrosius]

Bottom line:
The times they are changing. Crazy.

As a consultant I have to chime in here..... NFBC and NFFC are moving into uncharted waters at this stage, and are going to have to adapt to the new landscape. If too many more states follow Virginia's lead... it's game over. Maybe you'll see STATS start offing some DFS games. That would not surprise me in the least.

I don't think you will see STATS offering daily games. That is not our business model at all.