Daily fantasy sports and daily fantasy eSports are very similar when it comes to regulation and law.
It can be expected that developments in one industry could directly impact the development of the other. After the two biggest companies in daily fantasy sports, FanDuel and DraftKings, announced their product expansion to the eSports betting market, it became even more obvious that the two markets, namely daily fantasy sports and daily fantasy eSports, have many similarities.
With this in mind, you could ask the question of how the eSports market — more specifically the DFeS market — will be affected by the recent negative headlines in the DFS scene.
“It’s gambling and it needs to be shut down”
Not long ago, the New York Attorney General’s office ordered fantasy sports services FanDuel and DraftKings to stop taking money from New York residents. The New York Times reports that the companies’ services were recognized as gambling. The New York Attorney General’s inquiry that began last month asked the two leading companies for a range of internal data and details on how they prevent fraud.
“It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country,” NY Attorney General Eric Schneiderman said, adding, “Today we have sent a clear message: not in New York, and not on my watch.”
New York is one of the most populous and influential states in the U.S., and this move may have significant implications for the industry. According to DraftKings spokesperson Sabrina Macias, the company has 500,000 users in New York State.
Not the first time DFS has been shown the door
A similar scenario recently played out in Nevada, where the Nevada Gaming Control Board ruled that fantasy sports betting is gambling and ordered companies to obtain licenses if they wish to operate in the state. So far, neither operator has applied for licensing in Nevada.
Fantasy eSports service Vulcun ceased operations in Nevada as a result of that ruling. As previously mentioned, FanDuel recently acquired AlphaDraft and entered the eSports market. DraftKings also started offering esports services recently.
It is already clear how the movement in one market can directly or indirectly impact the development in the other.
Unikrn takes a different approach
On the other hand, Unikrn, a gaming and eSports company, has proven that there are alternative ways to deal with such barriers.
Even though the company does not offer daily fantasy eSports services, but rather operates in the esports betting market offering classic odds betting – betting on the outcome of an event. With its virtual currency called Unikoins, it overcame the legal barrier of money wagering and although participants cannot bet real money just yet, the platform offers the next best thing.
More recent headwinds
The fantasy sports industry has lately been under thorough inspection following a major scandal, as a DraftKings employee, Ethan Haskell, won $350,000 from FanDuel, supposedly based on insider information that he obtained access to via his employment at the rival site.
The New York State Attorney General’s office began an inquiry into fantasy sports services last month in response.
If the trend continues, companies like AlphaDraft and Vulcun would potentially need to rethink their strategies for customer acquisition in the US.