News

DFS news roundup: ESPN terminates exclusivity deal with DraftKings

11 February 2016
By Dan Podheiser

ESPN has cut ties on its exclusive advertising relationship with DraftKings just one month after their deal kicked off, Yahoo Finance reports.

The two companies had announced a deal last June that would see DraftKings be the sole daily fantasy sports (DFS) sponsor on ESPN, in exchange for DraftKings committing $200 million per year in ad spend on ESPN's family of networks. DraftKings and its top competitor, FanDuel, both advertised heavily on ESPN in 2015, until DraftKings' "exclusivity" kicked in in January.

But as the DFS industry faces legal battles across the U.S., state by state, operators like DraftKings and FanDuel are stuck paying huge legal fees in an attempt to maintain their footing. The Nevada Gaming Control Board ruled in October that DFS constituted gambling, and that DFS companies would need to apply for a gambling license from the state in order to operate there. Since then, attorneys general in New York, Illinois, Hawaii and Texas have ruled that DFS is illegal in those states.

The speculation – as noted by Yahoo – is that DraftKings was no longer able to commit to spending $200 million on advertising on ESPN in light of its legal battles, and the network let DraftKings out of the deal.

Ironically, it is likely the huge advertising push by DraftKings and FanDuel at the beginning of the 2015 NFL season – the two operators combined to spend well over $200 million in the first two months of the season – led to increased scrutiny from lawmakers across the country.

• We reported last week that Vantiv, one of the major payment processors in the daily fantasy sports industry, has decided to bow out of the industry entirely. And now there's more bad news on the payments front: Citibank has announced that it will block DFS transactions in New York. New York Attorney General Eric Schneiderman ruled in November that DFS constitutes illegal gambling.

• The DFS industry remains on solid ground in Rhode Island, however, as Attorney General Peter F. Kilmartin ruled last week that DFS is legal and that operators can continue doing business in the state.

• Virginia became the third U.S. state to pass a DFS bill through a legislative body on Monday, as SB 646 made it through the state Senate and now moves to the House of Delegates. The Virginia bill seeks to exempt DFS from state gambling law, while providing consumer protection measures for players.

• Finally, the PBS series "Frontline" aired a documentary about the DFS industry earlier this week, and it's pretty interesting. Watch the full episode below: