FanDuel wins legal battle with DraftKings; NFL imposes rule on fantasy sports ads

The National Advertising Division (NAD) has recommended that DraftKings stop its claim of being the largest US-based fantasy sports site.

The complaint was filed by FanDuel, which has long locked horns with DraftKings as to who has claim on being the “largest US-based” fantasy sports website. FanDuel claimed that its rival was engaging in false advertising for promoting itself as the “largest U.S.-based destination for daily fantasy sports.”

DraftKings argued that it hasn’t made claims of being larger than FanDuel, conceding that its rival does have more users and offers larger guaranteed prize pools. It instead based its claim on its belief that FanDuel isn’t a US-based company as it traces its roots to Edinburgh, Scotland where FanDuel CEO Nigel Eccles is based.

But even after asking the NAD to perform a “nerve center test” to determine the citizenship of a corporation, the NAD responded by saying that such a test wasn’t enough to determine FanDuel’s own citizenship. The NAD said that while FanDuel was founded in Scotland, it has since shifted most of its staff, including a significant majority of its senior staff, to the U.S.

FanDuel is also incorporated in Delaware, has its bank accounts in the U.S., and maintains its headquarters in New York City. Likewise, its website and mobile application are hosted on servers within the U.S., and the terms of use and privacy policy are governed by U.S. law.

DraftKings didn’t take the NAD’s decision too well, saying that it “respectfully disagreed” with the agency’s recommendation.

In other daily fantasy sports-related news, the NFL has issued a ruling to all 32 teams that they could only sign one-year deals with daily fantasy sports sites.

“With more teams signing advertising deals last year the league reviewed the overall landscape and made a proposal to enable all clubs to explore potential arrangements. It would be for one year,” NFL VP/Communications Brian McCarthy told Sports Business Daily.

As such, any agreement an NFL team makes with a daily fantasy sports provider would have to include one-year opt-out provisions.

A handful of NFL teams have already jumped in on partnerships with these sites, most notably FanDuel and DraftKings. As of this moment, FanDuel has a partnership with the Washington Redskins and the New York Jets while DraftKings already has a multitude of NFL team partners in its stable, including the New England Patriots, the Denver Broncos and the Pittsburgh Steelers.

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