If you’ve turned on your television or walked into any sports bar you cannot fail to have seen the incessant ads for DraftKings and FanDuel. On Tuesday New York State Attorney General Eric Schneiderman shut down the two sites in New York State.
As reported on ESPN:
“New York Attorney General Eric Schneiderman declared Tuesday that daily fantasy sports constitute illegal gambling in his state, and he sent game operators DraftKings and FanDuel cease-and-desist notices in a significant blow to the embattled, billion-dollar industry.”
Schneiderman demanded that DraftKings and FanDuel, the two industry giants, stop accepting “wagers” from New York residents. He did not ask the company to stop conducting its national business in New York.
“Our review concludes that DraftKings’/FanDuel’s operations constitute illegal gambling under New York law,” Schneiderman wrote Tuesday in the letter obtained by ESPN’s David Purdum and Darren Rovell and ABC News.
Inc Magazine reported in October that ‘FanDuel’s investors include Comcast and NBC Sports. DraftKings’s backers include Fox Sports. In addition, two of the NFL’s most influential owners–Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots (who happen to be facing each other this Sunday)–are investors in DraftKings. And the NFL’s Jacksonville Jaguars have a deep alliance with FanDuel: This season, the team opened FanDuelVille, a dedicated space at its stadium with room for 3,000 fans to watch games, monitor their fantasy football stats, and enjoy a few cocktails.’ Does anyone sense a slight conflict of interest here?
While the issue of whether or not the two companies will be further regulated (I am betting they will be although that may be a poor choice of words) will play out over the coming months the amount of money the two have spent in advertising in 2015 is staggering. DraftKings and FanDuel, are the two of the biggest startups in fantasy sports. Through October 15 2015 $206-million —($131.4 million by DraftKings and $74.5 million by FanDuel) has been spent according to CNN.com for television ads airing nationally.
The impact on advertisers has been kept quiet by media agencies. However when more than $200 million (not even through 10 months) in television advertising time has been taken off the market it follows that costs for advertisers have increased. It’s true that most of the two companies ads have appeared during sports programs. Yet compared to past years when GM, Ford, Mercedes, Lexus, etc., seemed omnipresent, they are now forced to outbid each other (programmatically or otherwise) to reach their target audience.
The argument that somehow fantasy sports ‘leagues’ and more so daily fantasy sports ‘leagues’ are games of skill is laughable. The same could be said for playing Blackjack in the casino –there can be skill involved but nobody believes for one second that playing Blackjack in a casino is anything but gambling. I expect that these fantasy leagues will end up having much stricter disclosure guidelines but won’t and should not be shut down entirely.
In the meantime while all this was going on (the air) advertisers and their agencies have had to make the best of reduced inventory and increased prices. The networks both broadcast and cable win too. Pretty much the rest of us are all losers.
What do you think – should fantasy sports leagues be prevented from advertising themselves as games of skill?