DraftKings’ margins fall more than half; Texas AG not swayed by DFS lobbying

Daily fantasy sports activity continues to slow despite the top two operators’ return to the New York market.

According to data compiled by the super number crunchers at DFS analyst SuperLobby.com, industry-wide guaranteed prize pool (GPP) entry fees came to $35.5m last week. SuperLobby notes that this total is less than what FanDuel used to report all on its own prior to the nine-weeks-and-counting decline in DFS activity.

FanDuel’s total GPP and cash game entry fees hit $17.8m last week, down $1m from the previous week. However, the site posted a margin of 10.83%, second only to its 10.89% margin in Week 5.

SuperLobby doesn’t track cash games at DraftKings, but the site’s GPP fees hit $17.18m, up slightly from $17.1m the previous week, marking the first week-on-week improvement in nine weeks. But the site’s margin slumped to 4.75%, less than half the 11% reported the previous week and its lowest margin since Week 2 of the NFL season.

SuperLobby didn’t have available data for perennial third-ranked DFS operator Yahoo, which announced this week that it had renewed its content deal with NBC Sports. The deal includes content sharing between NBC’s Rotoworld and Yahoo Fantasy plus NBC’s promotion of Yahoo’s season-long fantasy product.

Meanwhile, DraftKings and FanDuel’s efforts to mobilize their players to lobby Texas Attorney General Ken Paxton have been given a polite backhand. The Fantasy Sports Trade Association‘s ‘grassroots’ lobbying arm Fantasy Sports For All recently decided to bombard Paxton with appeals not to follow New York AG Eric Schneiderman’s lead in declaring DFS to be illegal gambling.

Perhaps it was the tone of this player appeal, which told Paxton to “stay out of their business,” but the AG wasn’t buying it. Paxton’s office issued a statement saying it had been tasked by state legislators with delivering an opinion on DFS’ legality and “a publicity campaign cannot and should not influence that objective inquiry.”

It seems likely that Paxton will follow Schneiderman and the state of Nevada in declaring DFS to be gambling. Texas has some of the most restrictive gambling laws in the US and legislators have consistently resisted efforts to expand gambling options.

Texas Penal Code 47.02 defines ‘bet’ as “an agreement to win or lose something of value solely or partially by chance.” There is a ‘skill game’ exclusion to this definition but it only applies to the “actual contestants in a bona fide contest for the determination of skill,” a clause on which the DFS operators are likely pinning their legal strategy.

However, a 1994 Texas AG opinion unearthed by gaming attorney Daniel Wallach (@WALLACHLEGAL) on a related query stated that this exception “does not embrace those who pay entry fees for a chance to win a prize from forecasting the outcome” of sporting events.

Regardless, the atmosphere in Texas re DFS is downright hostile. In November, Texas Gov. Greg Abbot wrote a letter to Texas Lottery Commission chairman J. Winston Krause saying he “wholeheartedly” supports the state’s existing gaming prohibitions and instructed the Lottery to cease any plans to explore diversification into sports betting, be it real-money or the fantasy kind.

source : www.calvinayre.com

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