DraftKings has been forced to delay plans to expand into the UK market while the furore over its legality in the US rumbles on.
The daily fantasy sports operator was granted a UK licence back in October, when the insider trading scandal that gripped the industry was at its peak.
It has since been kicked out of Nevada until it gets a sports wagering licence and even issued with a temporary cease and desist order (now cleared up) in New York. The burgeoning industry looks like imploding as several other states review whether to regulate it, ban it or restrict it.
The UK would be a safe haven as sports wagering is perfectly legal there, but it is so busy putting out fires in the US that it has halted expansion plans. DraftKings was due to start running in the UK this month, but it told Bloomberg the launch has been pushed back to “early next year”.
However, the expansion into the UK may have actually damaged its chances of remaining in the US. The UK considers DraftKings and its rival to be sports wagering companies and has granted them each a licence for sports betting.
But US opponents to the sites have seized on this and used it as ammunition in their war against DraftKings and FanDuel. They have been allowed to operate in the US by exploiting a loophole in the Unlawful Internet Gambling Enforcement Act 2006, which referred to fantasy sports betting as a game of skill as opposed to one of chance.
They argue that because daily fantasy sports constitute games of skill they should not be banned in the 46 states that forbid sports wagering. But they have a licence to operate as games of chance in the UK, and fully intend to operate in that way, and that has caused uproar among opponents in the US.
That may be one reason why DraftKings is delaying its push into the UK. There are 8.5 million season-long fantasy sports players in the UK and if DraftKings can convince 15% of them to play its daily games, it would have 1.3 million new customers and make tens of millions of dollars a year.
It has achieved that 15% ratio in the US, but that will be a far taller order in the UK. In Britain sports betting is a mature market and has been legal for decades.
Sports fans are besieged by advertising from traditional bookmakers and have an enormous range of prop bets, pre-match bets and in-play bets to choose from. Daily fantasy sports have thrived in the US simply because they are effectively the only way most sports fans can legally bet on sports, but in the UK they have plenty of opportunities for that already, and they are far more broad and sophisticated than what DraftKings and FanDuel offer. Nobody has really monetized fantasy sports in the UK – fans enjoy season-long sports for the prestige rather than any financial gain, and the main site fantasy.premierleague.com has struggled to convert many users from the free version to the paid version that dishes out prizes.
UK politicians are also wary of DraftKings and FanDuel.
Clive Efford MP, the shadow minister for sport, gambling and tourism, has written to the UK Gambling Commission demanding an explanation as to why Draftkings has been deemed “fit and proper” to operate in the UK. He told The Independent: “The Gambling Commission has a duty to make sure Draftkings is a fit and proper operator and I would say that a firm under investigation in America is not fit and proper. We need to make sure the public are not being ripped off.”
Sportsbook Review will continue to keep readers posted on the status of daily fantasy sports betting.