Fantasy games almost ready for launch in UK
FanDuel ‘mapping out overseas plans’ amid US concerns
The company is locked in long-running negotiations over the legality of the games as lawyers and state legislators decide whether they breach US online gambling laws.
Auditors have now issued a warning about the impact of the action on the company’s ability to continue to trade, although analysts say this is being treated as a worst case scenario and part of a normal risk assessment.
Nevertheless, company auditor Deloitte says the legal action represents “material uncertainty” that casts “significant doubt” on the company’s ability to continue as a going concern.
FanDuel, whose founders include husband and wife Nigel and Lesley Eccles (pictured), is defending its position and has been investing heavily and acquiring other companies in a rapid expansion of its operations.
While it remains confident of winning its case, its expansion overseas will be seen as a strategic attempt to protect and build its business elsewhere if the US market proves too challenging.
The Edinburgh and New York headquartered company said that it is “nearing completion on an international product that will be made available to consumers in the United Kingdom in 2016. The group will continue to map out international strategy and product expansion in European markets to complement it growing user base and product offerings in North America.”
In recently released results, it says: “The market the company operates in has tremendous growth potential and market penetration for the product remains low.”
Because of the level of investment, it recorded a loss for the adjusted 18 months to the end of June 2015.
“The directors believe the investment strategy undertaken during the period will drive the future success and growth of the group with due consideration of the ongoing litigation issues.”
The group received $339.6m in funding rounds and continues to hold discussions with other investors. Net assets stood at $244,034.
Since the results were prepared the civil litigation and regulatory enquiries have led to a number of “adverse advisory opinions”, but the group considers itself to be operating lawfully.
However, it has agreed to suspend activities in some states which has led to a loss of almost 20% of turnover. The company, while confident of defending its position, is also preparing for potential claims for damages.
“As such, these material legal and regulatory uncertainties could have a significant impact on the group’s future operations,” it states.
FanDuel has led the industry in calling for consumer protection and it believes that more legislation will be passed in various states…”that clarifies the regulatory environment and eliminates some of the uncertainty in these regions”.
Five states – Kansas, Virginia, Indiana, Mississippi and Tennessee – have passed aws to clarify the legality of fantasy sports.
While state legislators debate the legality of fantasy sports, the market is growing, with 57 million Americans and Canadians now playing these games. FanDuel has developed partnerships with professional sports franchises and media companies.
However, the legal action has the potential to disrupt its plans and already some television and payment processing companies have withdrawn their support.
Photo: Lesley Eccles (copyright, Terry Murden)