An IPO is off the table for FanDuel, which is reportedly valued at $1.3B, because co-Founder & CEO Nigel Eccles said that his company "doesn't need to raise any more money at this point, and that the regulatory landscape for daily fantasy needs to stabilize before any company goes public," according to Joshua Brustein of BLOOMBERG NEWS. Eccles said that an IPO "would only work" for a company that is both "growing and turning a profit." Brustein noted neither FanDuel nor DraftKings "has managed to pull that off yet." Eccles said that FanDuel "will eventually [choose] profit over growth." He added that the company "could become profitable immediately by cutting its spending on ads." Eccles said that his site "may have gone a bit overboard" the last two months. He added, "People, when they saw the ad for the 87th time, they thought, I’m sick of this." Brustein wrote the ad blitz "was more than annoying." It also "was expensive." FanDuel has spent more than $100M on advertisements since August, but after weeks of "heavy spending, the company has dropped off the list of top ten television advertisers, as has DraftKings." FanDuel will also "dial back the emphasis on cash prizes." Eccles said that one thing they "won’t be considering," however, "is a merger with DraftKings." Eccles: "I can see why it would be attractive to them. I don’t know why they think it would be attractive to us." Meanwhile, Brustein notes Eccles "thinks that a handful of states will pass consumer protection laws in the next year." Eccles said regulation could come with an additional tax burden, but "that’s not come up as much as we’ve thought." He added, "I assumed it would have been high on the agenda" (BLOOMBERG NEWS, 11/4).
COURT REPORT: In Boston, Bob McGovern reported Texas-based gaming systems developer Video Gaming Technologies has accused DraftKings and FanDuel of "improperly using its patented technology for real-time interactions between gamers and the companies." The company "sued both daily fantasy sports giants in separate lawsuits seeking royalties in a Texas federal court that has historically been harsh on accused patent infringers" (BOSTON HERALD, 11/5).
LEAGUE LEADERS: THE MMQB's Andrew Brandt wrote the NFL "should hire a truly independent 'gambling czar,'" so that it -- rather than the other leagues -- "will look progressive and enlightened" as the first to do so. The NFL "wants to avoid the dark shadows of gambling." However, in doing so, the league "risks alienation for the hypocrisy of allowing, encouraging and monetizing fantasy football. " The gambling paradox in the NFL -- and in all sports -- "is approaching an inevitable inflection point." Having "habitually used the mantra of 'integrity' in distancing itself from traditional forms of gambling, the NFL’s days of plausible deniability about association with gambling seem numbered." The reality is that the NFL "has accepted gambling -- in softer tones -- for some time." It may be a "bumpy ride from a public relations standpoint, but the walls between the NFL and gambling are being broken down." As calls for DFS regulation as a form of gambling increase, investments made by Patriots Owner Robert Kraft and Cowboys Owner Jerry Jones "will face increasing scrutiny and likely force (another) uncomfortable conversation" between NFL Commissioner Roger Goodell and the two execs (MMQB.SI.com, 11/5).
GROWING LIKE A WEED: In Cincinnati, Steve Watkins notes PredictionMachine.com "sells information that helps gamblers win bets on games and now provides fantasy sports information to help players pick their teams for each day’s games." The info "to help with gambling on games" is still about 70% of the company’s revenue. About 15% "comes from licensing and other business-to-business services." But the other 15% "comes from daily fantasy services." And it is "growing like a weed." Daily fantasy was just 2.5% of last year’s sales and less than 1% in '13, but Prediction Machine’s daily fantasy football revenue "declined after Nevada declared it illegal on Oct. 15." That also meant Prediction Machine CEO & GM Paul Bessire "had to refund money from Nevada residents -- a big chunk of his customer base." The DFS industry in total suffered a 13% decline in NFL business "right after Nevada made it illegal." With the NBA "starting last week, daily fantasy makes up" 50% of his sales in that segment. Bessire "expects daily fantasy to keep growing as a chunk of his company’s business." His company will "add baseball and hockey next year, when he anticipates daily fantasy making up" 25% of sales (BIZJOURNALS.com, 11/4).
