Potential reasons why FanDuel and DraftKings’ approaches to state bans are not consistent

By David Cook
The US continues to be a legal minefield for the likes of FanDuel and DraftKings, as it has now been reported that the daily fantasy sports (DFS) operators have pulled out of Mississippi.

This followed an issuing of a legal opinion by the state’s attorney general (AG) Jim Hood (you know the drill by now), ruling that DFS is illegal under current state law for both licensed and unlicensed operators.

FanDuel and DraftKings adhering to this request is not actually in line with all the decisions they have made with regards to pulling out of states where they are not wanted.

The voices of Nevada and Hawaii were heard loud and clear, although the case of Nevada was due to DFS being brought in line with sports wagering licensing procedures as opposed to an AG ruling.

The same cannot be said for New York, Texas and Illinois however, with the New York case in particular attracting plenty of media coverage, and the companies were granted a stay of injunction by an appellate court in December, allowing them to remain in the state for the time being. Separate lawsuits were filed by FanDuel and DraftKings arguing against Illinois AG Lisa Madigan’s decision.

Why the differing approaches?
This could just be coincidence, and I for one do not claim to be a legal expert that can tap in to the way the operators are thinking, but population sizes could be an obvious answer as to whether or not individual states remain lucrative markets for FanDuel and DraftKings.

According to the United States Census Bureau, Nevada had a population of 2.9 million as of July last year, while Hawaii had a population of 1.4 million. Mississippi hosted 2.99 million residents.

If you were to compare those figures to the three states where the operators have decided to rebel, you would see a striking difference. Texas boasted a population of 27.5 million, New York state’s population was 19.8 million and Illinois’ was 12.9 million. That is a total of 60.2 million people, almost one fifth of the entire US population of 321.4 million. Put yourself in their shoes. Would you want to miss out on a pool of that size without a fight? You would at least imagine that is worth more of a fight than the combined population of 7.29 million people when adding together the totals from Nevada, Hawaii and Mississippi.

In explaining its decision to leave Mississippi, FanDuel is quoted by Legal Sports Report as stating: “We strongly disagree with the Mississippi attorney general’s recent opinion letter, which reflects a fundamental misunderstanding of fantasy sports. We firmly believe our contests have always been operated lawfully in Mississippi. But the opinion has now created uncertainty about the law in Mississippi, and as such we are voluntarily suspending play in the state for the time being.

“We will focus our efforts on the state legislature in Mississippi because, as in states across the country, that is where the long-term future of fantasy sports will be decided.

“More than 20 states, including Mississippi, are advancing legislation to modernise laws to catch up with the evolution of fantasy sports and install needed consumer protection regulations.”

Griffin Finan, counsel for DraftKings, said: “As the legislative process plays out, we will voluntarily pause operations in the state and look forward to resuming offering daily fantasy sports to our fans in Mississippi.”

Usage numbers
The size of a state’s population is one issue, but the number of already-paying players being barred from the games tells us more. In a report published in November, research firm Eilers & Krejcik Gaming estimated that New York accounts for a higher percentage of DFS players in the US and Canada than any other US state with 12.8% of players. Illinois was third on the list with 6.1% and Texas ranked sixth with 4.9%. When adding this together, it would mean that 23.8% of players would no longer be playing DFS if the operators pulled out of those states.

In the case of New York, both FanDuel and DraftKings have said that over 500,000 of their users come from that state.

Thankfully for FanDuel and DraftKings, second-placed California seems more open to regulation on this front, with AB 1437 having passed a vote of the Full Assembly in January.

It should be noted that it is difficult to decipher the differences between usage percentages for the operators individually, but neither seems set to loosen its grasp on the three states it refuses to vacate.


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