Setback for fantasy games firm
TV advertising ban for FanDuel as ‘gambling’ row escalates
Fantasy sports firm FanDuel’s rapid growth in the US could be running into major problems after a digital television channel banned its advertising in a growing dispute over online gambling which is illegal in the US.
FanDuel’s chief executive Nigel Eccles told an audience of entrepreneurs in Edinburgh on Thursday night that the company is now one of America’s top five television advertisers.
But earlier that day it emerged that the SEC Network, an American digital cable and satellite television channel owned by ESPN, had decided to phase out advertising by FanDuel and its big rival DraftKings.
SEC commissioner Greg Sankey said: “Is it a form of gambling? Is it a form of skill game? I think there is some question about that. And I think the appropriate place for us…working with ESPN, is not to include that advertising on the sec network moving forward.”
ESPN, a joint venture between The Walt Disney Company and the Hearst Corporation, rejected FanDuel in its early days when the Edinburgh and New York headquartered company approached it for investment.
Mr Eccles’ wife Lesley (pictured), a co-founder and director, said recently that ESPN had been concerned about whether the firm breached strict anti-gambling legislation.
In an interview with Daily Business, in August she said: “They invited us in with a view to investing but they were not interested because they could not get comfortable with the legal issues.”
Both FanDuel and DraftKings have grown rapidly to become $1 billion ‘unicorn’ companies on the back of the enormous popularity of fantasy sports in the US. FanDuel pays out $2 billion a year in prize money.
In recent weeks, as reported by Daily Business, there has been a move to have these games classes as gambling rather than games of skills.
US Congressman Frank Pallone has asked Congress for a hearing to investigate whether the sites are flouting restrictions on online gambling.
He said: “These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result. Despite how mainstream these sites have become, though, the legal landscape governing these activities remains murky and should be reviewed.”
The law is proving contentious. Online sports wagering and online gambling are outlawed under the Professional and Amateur Sports Protection Act, or PASPA, which was passed in 1992.
In 2006, the Unlawful Internet Gaming and Enforcement Act (UIGEA) specifically defined fantasy sports and created a law protecting them. The legislators did not consider daily fantasy sports, because they did not exist at the time.
10.40pm: A FanDuel spokesman said the company was making no comment.