Daily Fantasy Sports Competition
After a hugely popular start to the daily fantasy sports market, the industry has taken a bit of a dip over the last couple of years due to legal concerns over whether or not fantasy sports fall under the umbrella of PASPA’s authority.
These worries have caused the big names in the industry like FanDuel and DraftKings to alter their approach. For the sites smaller than the top guys, they now are falling by the wayside or trying their hardest to stay afloat with hopes that daily fantasy sports become legalized nationwide.
But why is this the case?
Daily Fantasy Sports Market Today
According to the Fantasy Sports Trade Association, a total of 81 out of 118 different companies that provide daily fantasy services and contests have either shut down their sites or their current status is unknown. Some of these struggling businesses ended up going bankrupt and even ripped off their customers in the process.
At one point the industry looked like it was going to be unstoppable as sites began popping up everywhere but that seems like a lifetime ago as now more and more of those sites are losing steam at a rapid pace.
This is mostly due to the legal concerns scaring off investors and potential advertising opportunities. It’s hard to keep yourself funded when the businesses that fund you are worried that they may get in legal trouble. The sites that went under simply couldn’t afford to pay their taxes and fees that were brought about after the 2015 NFL season.
We Should Have Expected This
The whole reason that daily fantasy sports even became a thing was because people figured out a loophole in the federal sports gambling laws and they acted quickly on it. Maybe a little too quickly because the proper precautions weren’t taken.
Anyone and everyone that knew how to start a website, and happened to be a sports fan, was creating their own daily fantasy sports sites with various contests that resemble gambling opportunities. People saw that there were big sites doing it so it must be legal, and they rode the coattails of the bigger names in the industry.
While the laws weren’t as specific as those opposed to DFS sites may like, some still believe that state laws restricted fantasy sports from the beginning. The sudden worry and attempt to officially legalize the activities just began in the last year or two and it seems like just an attempt to cover their butts.
Looking back on all of this it is painfully obvious that daily fantasy sports were going to have legal and regulatory issues so it’s hard to empathize with these struggling companies without thinking that they were simply being stupid and making rash decisions with little to know knowledge of the law.
No Competition for DraftKings and FanDuel
DraftKings and FanDuel have already developed such huge names that it would be close to impossible for any other DFS to swoop in and corner the market. They have lasted through all of this turmoil and will likely come out on top of the whole situation once DFS sites are legalized nationally. It was proven that it isn’t as easy as simply throwing money at a site and it’s just a big deal like FantasyHub, DraftOps, and Fantasy Aces tried to do. All of which ended up going bankrupt, losing millions of dollars in the process.
The rumor is these that DrafKings and FanDuel are going to merge in the summer of 2017 and once that happens, newcomers to the game can forget about it. That juggernaut of a daily fantasy site would never allow for competition to even make an attempt at getting in on their California sports betting action.