August 24, 2024

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Good morning. We regularly bring interesting guests for a visit to our FOS studio in Manhattan, and this week I reconnected with Nigel Eccles, the cofounder of FanDuel. There was a time in my reporting life when I spoke to Nigel regularly, as FanDuel and rival DraftKings battled legal challenges in multiple states—as well as each other. Now, nearly a decade later, Nigel has moved on to crypto (!) but when it comes to DraftKings and FanDuel, not as much has changed as you’d think. Read on and I’ll tell you about it.

— Dan Roberts [[link removed]], FOS EIC

DraftKings and FanDuel Still Can’t Escape Each Other

Kirby Lee-USA TODAY Sports

In 2015, nearly a decade ago, DraftKings and FanDuel were the biggest story in the business of sports.

I was at Fortune, where I wrote a cover story [[link removed]] on DraftKings CEO Jason Robins, then I went to Yahoo Finance in 2016 and continued to cover the beat. Every week there was an update to the saga. First they spent eye-popping amounts of marketing money to flood television and radio airwaves with their ads and promo codes; then came scandal when a DraftKings employee won $350,000 in a FanDuel fantasy contest; then New York’s attorney general sued the two companies, accusing them of being illegal gambling operators and part of a “multibillion-dollar scheme intended to evade the law and fleece sports fans.” Other states, including Florida and Texas, followed suit.

In May 2018, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act, the federal ban on sports betting everywhere but Nevada. It was like the heavens opened and shone down on DraftKings, and FanDuel, which always insisted their “daily fantasy sports” (DFS) games weren’t illegal betting products, but also always planned for the day when the sports betting floodgates would open. Now sports betting is legal in more than 30 states.

“The U.S. was always an anomaly. Like, every other Western country has sports betting, right, and the U.S. only had it in Nevada. It made absolutely no sense,” Nigel Eccles, the cofounder of FanDuel, told me in an interview in the FOS studio [[link removed]] this week in New York. “No one could predict how or when it would happen, but we always sort of thought, ultimately it must happen … and if that does, then we’re in a great position.” (Still, he says, the years spent fighting those legal battles were “hellish.”)

FanDuel (founded in 2009 in Edinburgh, Scotland) and DraftKings (founded in 2012 in Boston) were so similar that in November 2016 they announced they’d merge. Less than eight months later, they scrapped the merger after it became clear antitrust regulators would frown on it. The two companies took very different paths from there: In 2018, FanDuel sold to Irish bookmaker Paddy Power Betfair. In 2020, DraftKings went public via a $3.3 billion SPAC merger.

Fast-forward to now, and you’d think a lot has changed since the days of DFS mania. But much remains the same for these two companies and their relationship to each other.

DraftKings (DKNG) boasts a $17.5 billion market cap; FanDuel parent company Flutter Entertainment (FLUT) has a $28.4 billion (GBP) market cap. The two enjoy a combined 65% market share of U.S. online gaming revenue, according to the latest report from Eilers & Krejcik Gaming [[link removed]]. BetMGM is in distant third with 19% of revenue. In terms of handle (total dollars bet, which is not the same as revenue), DraftKings and FanDuel constantly trade the top spot each month.

It’s a duopoly. And neither company can really escape the influence and shadow of the other.

Each watches the other so closely that when FanDuel said it would not follow DraftKings in implementing a winner’s surcharge in high-tax states like Illinois and Vermont, DraftKings within two hours bagged its surcharge plan [[link removed]].

It bears mentioning that more recently, DraftKings has taken hits while FanDuel is on a hot streak. In July, DraftKings abruptly shut its NFT marketplace [[link removed]] and sold VSiN back to Musburger Media [[link removed]] at a rumored loss from the $70 million it bought it for in 2021. This week, a Massachusetts judge declined to dismiss [[link removed]] a class action lawsuit against DraftKings over deceptive marketing. Both DraftKings and FanDuel have tried their own forms of original media, with limited success. They remain giants in sports media sponsorship spending. If you look at the top 10 sports podcasts as of Friday, five are sponsored by DraftKings. (Relying wholly on the marketing money funnel of betting companies does not look to me like a smart and hedged approach for media outlets, by the way.)

Other players have rushed into the sportsbook race—most notably, ESPN Bet and Fanatics Sportsbook. When I ask people in the industry how big those can get, they laugh. Most challengers won’t survive, or certainly won’t touch the two elephants in the room. For my money—and I’m not even a bettor—DraftKings and FanDuel are as interesting to watch now as they’ve ever been.

SPONSORED BY UPPER DECK

Enter Into Kerri’s Athlete Archive

Front Office Sports and Upper Deck have joined forces to celebrate the nostalgia of sports, shining a spotlight on the childhood inspirations, career influences, and life milestones of the world’s most notable athletes.

In this episode of Athlete Archives [[link removed]], Kerri Walsh Jennings shares captivating stories about the key figures—both past and present—who have inspired her, her most memorable career moments, and her hopes for the next generation of athletes.

Check out [[link removed]] the full episode.

Good Week / Bad Week Ronaldo Gains Subs, Colorado Gains Scrutiny

Winslow Townson-USA TODAY Sports

Good week for:

Cristiano Ronaldo ⬆ The Portuguese soccer superstar further capitalized on his global fame by launching a YouTube channel [[link removed]] that immediately shattered sign-up records. After seeing 20 million subscribers sign up on the first day, Ronaldo’s YouTube page surpassed 30 million followers by the end of the week, and it is still climbing.

Ronaldo’s new presence on YouTube adds to his social media following, which has already exceeded 700 million. The five-time Ballon d’Or winner is 39, and he looks ready to dominate the content game whenever he finally hangs up his cleats.

WNBA ⬆ Despite a monthlong break due to the Paris Olympics, the league continued its momentum into its first full week since returning to action. Sunday’s win by Caitlin Clark and the Indiana Fever over the Seattle Storm averaged 2.23 million viewers on ABC, the third-most-watched regular-season game this year.

While Clark is still the WNBA’s main draw, the rest of the league is also growing. On Tuesday, the Connecticut Sun hosted the Los Angeles Sparks in Boston’s TD Garden, attracting a sellout crowd [[link removed]] of 19,156, the most in franchise history.

Bad week for:

Venu Sports ⬇ The joint streaming venture from Disney, Fox, and Warner Bros. Discovery wasn’t able to launch Friday as planned. Instead the companies filed a formal notice to appeal a preliminary injunction [[link removed]] blocking the service’s debut.

That led to FuboTV—the company that is challenging Venu in court— seeing its stock price rise [[link removed]] throughout the week. Now, Disney, Fox, and WBD are left to weigh the pros and cons of continuing to try to get Venu off the ground.

University of Colorado ⬇ Former special teams coordinator Trevor Reilly told Sports Illustrated he took a trip to Saudi Arabia to seek out NIL (name, image, and likeness) funds from the country’s Public Investment Fund. The university told FOS [[link removed]] that Reilly acted “on his own accord,” while Blueprint Sports, which runs the school’s NIL collective 5430 Alliance, told FOS that Reilly was “never authorized” to work on its behalf.

You Might Have Missed VAR vs. Fans, Flores vs. NFL

Kim Erik Eriksen

The video assistant referee, or VAR, was meant to make soccer fairer. But as much as supporters hate their teams receiving bad calls from refs, they dislike VAR even more. In Scandinavia, fans are lashing out. Contributor Mike Jakeman asks whether the tech can survive the fan backlash [[link removed]].

Brian Flores sued the NFL in January 2022, three weeks after he lost his job as coach of the Dolphins, alleging racial discrimination. This week, Miami quarterback Tua Tagovailoa unloaded on Flores’s coaching style and called him a “terrible person.” Contributor David Kaplan explains why Tua’s comments might have the NFL smiling [[link removed]].

The red-hot National Women’s Soccer League has a new collective bargaining agreement and it includes higher minimum salaries, guaranteed contracts, an end to the player draft, and charter flights. Margaret Fleming [[link removed]] has the full CBA and a chat with the NWSL Players Association prez [[link removed]].

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