DraftKings is "quietly raising" another $200M in funding, and the round could signal that investors are "still betting that the company has a future," according to documents cited by Sara Castellanos of the BOSTON BUSINESS JOURNAL. Data from Seattle-based venture capital research firm Pitchbook shows that the upcoming funding round, "which hasn't been officially closed yet, would bring total investor funding" to about $630M since the company was founded in '12 and "would put DraftKings at an estimated" $2B valuation (BIZJOURNALS.com, 10/29). In Boston, Adams & Woodward note DraftKings got $300M three months ago from Fox Sports, the Kraft family, which owns the Patriots and Revolution, "and other major sporting enterprises." However, it is "unclear if the company is still trying to raise the money." Meanwhile, at a public hearing held by the Massachusetts Gaming Commission Thursday, attorneys for the agency said that it "does not appear the games are illegal under state law, although there is some gray area." Attorneys wrote, "The legal state of DFS is in flux." Nonetheless, officials said that fantasy sports games "should be regulated by Massachusetts, if only because of the money at stake" (BOSTON GLOBE, 10/30).
DUEL MEANING: The WALL STREET JOURNAL's Sharon Terlep noted FanDuel co-Founder & CEO Nigel Eccles is "calling on the government to regulate the fantasy sports business." Eccles on Thursday said that state government intervention is the "only way to ensure consumers can trust the fantasy sports industry." He said that a plan announced this week by the industry’s trade group to police itself with an outside control board is "positive but doesn’t go far enough." He added, "Consumers want a higher level of protection. They need to know it’s fair, that the information is protected. If the consumer doesn’t trust the industry than the business doesn’t exist." Eccles said that he "supports efforts underway in several states, including recently announced legislation in Illinois, to implement such controls." FanDuel on Thursday planned to "send a letter to customers laying out Eccles’ views" (WALL STREET JOURNAL, 10/30). In California, Ryan Kartje notes this is "not the first time that Eccles has disagreed with others in the industry." At a Fantasy Sports Trade Association meeting last month, Eccles "called out his main competitor, DraftKings, for offering fantasy contests that were legally questionable" (ORANGE COUNTY REGISTER, 10/30).
THERE ARE RULES HERE: THE HILL's David McCabe reported the DFS industry's move to "police itself is drawing fire from congressional critics, with some stepping up their calls for federal intervention." U.S. Rep. Frank Pallone Jr. (D-N.J.) in a statement said, "The idea that a so-called ‘independent authority’ in its infancy would compel this multi-billion dollar industry to self-police is not only unrealistic, it falls far short of the oversight needed to ensure that daily fantasy sites are fair and transparent." U.S. Rep. Hakeem Jeffries (D-N.Y.), who called for the House Judiciary Committee to hold hearings on fantasy sports, "was more measured." He said, "They’re on a very short leash, but it’s reasonable to at least consider in the short term whether this is an appropriate step in the right direction or simply a sham" (THEHILL.com, 10/29).
RED-TAPE DISTRICT: In Boston, Dan Adams reports a potentially fractured regulatory landscape "poses both practical challenges and financial threats" to DraftKings and FanDuel. The companies "may need to implement different systems to comply with a dozen different standards and pay heavily for the right to conduct their games in certain states." New Jersey-based gambling consultancy Spectrum Gaming Senior VP Joseph Weinert: "If one company had to suddenly go into 50 states with different regulations -- that would be overwhelming." GamblingCompliance Americas Senior Legal Analyst Kevin Cochran added, "If they have to go state-by-state, that could kill these huge, guaranteed prize pools. It’s just not as enticing for the common player if you’re not able to turn $20 into $1 million." Some states "have gambling rules that prohibit customers from using credit cards, which would require alternative payment systems." Experts said that above all, DFS companies "cannot afford casino-style taxation" (BOSTON GLOBE, 10/30). In DC, George Will in an op-ed writes under the header, "The Government Wants In On The Fantasy Sports Action." When governmental action "restricts Americans’ choices, ostensibly for their own good, the paternalism usually has a pecuniary motive." DFS "is obviously gambling: Players risk money wagering on variables -- individual athletes’ performances -- beyond the gamblers’ control." Not for the first time, the law "is a lagging indicator of where society is going without asking the government’s by-your-leave" (WASHINGTON POST, 10/29).
ELEPHANTS IN THE ROOM: In N.Y., Neil Irwin noted DFS received "detailed discussion" during Wednesday night's Republican presidential debate, where Jeb Bush "indicated awareness of recent allegations of 'insider trading' by employees of services like DraftKings and FanDuel, and said 'there should be some regulation.'" Chris Christie "retorted with a blustery assault on the very idea of regulating fantasy sports when there are so many bigger issues." But Christie of all people "should know how federal laws shape the entire context in which gambling enterprises operate." Irwin: "He is, after all, the governor of New Jersey, and 'NCAA vs. the Governor of New Jersey' is a federal court case, still in process, that seeks to stop New Jersey from allowing sports betting within its borders, citing a 1992 federal law" (NYTIMES.com, 10/29). In Newark, Brent Johnson writes on the surface, it "appeared Christie was trying to show he felt the presidential race deserved more significant questions about more pressing topics." But some experts said that the moment also "revealed a high-wire act on gambling that Christie has to walk as a Republican presidential candidate." If he "appears to endorse fantasy sports ... the governor runs the risk of alienating conservative voters." On the other hand, it is "difficult for Christie to criticize the industry because New Jersey's economy relies partly on the gambling at Atlantic City casinos and horse-racing tracks" (Newark STAR-LEDGER, 10/30).
