DraftKings Offers To Rescue Stranded FantasyHub CustomersMarch 15, 2016 1:11 pm
Daily fantasy sports betting has come under increasing scrutiny from US legislators of late, a situation that was exasperated by an insider trading scandal that rocked the industry at the end of last year, and more recently FantasyHub customers being cut-off from their funds after the site suspended its operations in February. Now, however, DraftKings has offered to bail out FantasyHub’s beleaguered customers, even though it apparently has no intention to acquire an interest in the company.
A lack of regulation in the DFS industry means operators, instead, make a commitment to police themselves by adhering to suggestions laid out by a lobbyist group called the Fantasy Sports Trade Association (FSTA). One such requirement is that player funds are expected to be kept segregated from the company’s operating funds, something that FantasyHub does not appear to have done.
With the DFS industry currently seeking to gain legitimate acceptance in the US, the FantasyHub scandal obviously threatened to make a messy situation even worse. DraftKings’ offer to bail out the site’s stranded customers will therefore help defuse the troubling situation, as well as secure some positive PR for DraftKings. Commenting on the issue, DraftKings co-founder Matt Kalish said:
“This is not an acquisition deal or an asset purchase deal. This is a very simple deal, where we’re assigning two liabilities from [FantasyHub] over to DraftKings in an effort to do the right thing for their player base, which has a nearly 80 percent overlap with our own.”
In order for FantasyHub customers to receive their funds from DraftKings they will now be required to contact the company, or open up accounts at its website. Once in receipt of their funds, there will be no obligations for them to then play at DraftKings, and they will be able to immediately withdrawn their money, if they so choose.
In the meantime, the situation has shown the FSTA to be an ineffectual guiding light for the DFS websites, whilst demonstrating the pressing need for US states to introduce their own regulation of the industry.