Wednesday, November 11, 2015

Fantasy sports under fire, including prominent FanDuel and Draft Ops sponsorships at Barclays Center

Update: Bloomberg reports that four smaller sports sites, including DraftOps, have stopped letting users from New York enter their paid contests, which the two biggest sites, DraftKings and FanDuel, are contesting the Attorney General's order and letting customers continue to play.

At the Barclays Center, for an Islanders game
It's about the children, right?

A huge new advertising sector at professional sports facilities is under fire, especially in New York State, where yesterday Attorney General Eric Schneiderman issued a cease-and-desist order to "the two biggest daily fantasy sports companies, DraftKings and FanDuel, to stop accepting bets from New York residents, saying their games constituted illegal gambling under state law," as the New York Times reported.

“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,” Schneiderman stated. “Today we have sent a clear message: not in New York, and not on my watch.”

As the companies fight back, claiming to ESPN that these are games of skill, Schneiderman's decision will reverberate nationally, where New York joins seven states (plus the province of Quebec), where fantasy sports is banned and FanDuel is a sponsor of the Nets.

Previous version of Draft Ops web site, omitting New York
Indeed, Draft Ops, a growing smaller player in the industry, which this summer signed a three-year deal with the Barclays Center, was not named by Schneiderman, but just changed its web site (see left and below) to warn New York residents that they are ineligible to play.

Oops. (FanDuel still hasn't changed its site.)

Draft Ops has a major presence at the Barclays Center, as shown in the photo above right, dominating the end of the hockey rink, advertising "Pick. Watch. Win."

(Some on Twitter wonder whether the DraftOps advertising will go down. A Forbes contributor observed, regarding FanDuel, "How the team [Nets] intends to deal with the logo of an illegal company placed throughout its arena remains to be seen.")

The new role of fantasy sports

Such advertising bolster's Schneiderman's conclusion that the current crop of fantasy sites profit mainly from the wagering, rather than, as traditional fantasy sites do, earn money from administrative fees and advertising.

Current version of Draft Ops web site says New York
residents are ineligible to play (click to enlarge)
As the Times put it, "By concluding that daily fantasy games constitute gambling, Mr. Schneiderman has also directed an uncomfortable spotlight on some professional sports leagues that oppose gambling while maintaining financial partnerships with daily fantasy sports sites."

Last July, Venues Today reported on the Barclays Center's three-year deal with Draft Ops:
For Barclays Center, the appeal of working with Draft Ops came with being used by the daily fantasy sports website as a launching pad for their brand.
“No different from many other brands we work with, the attractive piece here was they’re going to use us as a vehicle to really launch their brand or make a big play in New York,” said Mike Zavodsky, Barclays Center’s executive vice president of Global Partnerships. “We like working with brands that use us as a centerpiece of their portfolio in terms of activation.”
And the centerpiece of the partnership is the Draft Ops Ice Club, which will be located directly next to the rink on the west end for all New York Islanders' games. The space will include major branding, extending from the glass through the first five rows.
Big business

Today's NY Times, click to enlarge
The Washington Post, reporting in September on how "Draft Ops becomes exclusive fantasy sports partner of Capitals, Wizards and Mystics," even showed the Draft Ops logo on Mystics jerseys.

This is big business. The Times reported that DraftKings "is valued at more than $1 billion and has the financial backing of Major League Baseball and the N.F.L. owners Robert K. Kraft of the Patriots and Jerry Jones of the Cowboys."

The Sporting News last month noted "29 of the NFL's 32 franchises signing advertising contracts with either FanDuel, DraftKings or Yahoo! Inc., [making] the league... the biggest business partner of daily fantasy sports." ESPN reported, "Although the major sports have anti-gambling policies, the National Hockey League, MLB and the NBA all took equity positions in daily fantasy. "

Last month, in Despite Industry Crisis, Fantasy Sports Leaders Pour On Ads, Times Sports Business reporter Richard Sandomir observed that the "get-rich commercial messages of the fantasy sports leaders DraftKings and FanDuel have inundated the airwaves as no advertising category has in recent memory." 

Sandomir noted that Congress may "re-examine the 2006 federal legislation that outlawed online poker and sports betting but allowed fantasy sports contests to be classified as games of skill." For now, state attorneys general are ahead of the game, as is the FBI.

Also note Mark St. Amant's op-ed last month in the Times, The Fantasy-Sports Non-Scandal, arguing that "for me and for millions of players like me, it remains a hobby, an entertainment."


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