3rd Biggest DFS Site Files for BankruptcyFebruary 6, 2017 3:01 pm
Fantasy Aces, the daily fantasy sports industry’s third biggest operator behind DraftKings and FanDuel, has filed for Chapter 7 bankruptcy, potentially costing its customers the $1.3 million they currently have in their accounts.
In a development mirroring the scandal which rocked Full Tilt Poker in 2011, it appears that Fantasy Aces may not have taken steps to protect its player funds, but instead used the money to pay for its business related operational costs. According to reports in the media, the company’s “Players Account” is showing just $2,419 in funds, while Fantasy Aces has announced that it has $1.8 million in assets but $2.96 million in creditor liabilities. Incredibly, the Fantasy Aces portal has previously included the following statement:
“Fantasy Aces LLC is a US based fantasy sports website owned and operated in Southern California and our members funds are held in a segregated US bank account, separated from our operational accounts.”
If it does turn out that the firm did not in fact honor its commitment, then it could find itself subject to a federal prosecution for wire fraud. In the meantime, the development is sure to tarnish the reputation of more legitimate companies operating within the DFS industry. Only recently, Fantasy Aces was hoping to be bought out by Fantasy Draft, but the deal fell through in the end due to issues concerning “due diligence.” As an extract from the email that has now been sent to Fantasy Aces customers reads:
“After spending over a year attempting to secure long-term capital, including recent negotiations with two notable companies which subsequently failed to close, we are left with an unresolvable financial burden.. Our site is temporarily shuttered and all accounts are on hold during this time while we work with the bankruptcy court in finding the fastest possible solution for our players.”
This is not the first example of DFS firms finding themselves in extreme financial troubles, though, and last year DraftKings bailed out players with accounts at the shuttered site FantasyHub, as it shared about 80% of its customers and wanted to help out these players. Similarly, players with accounts at the insolvent DFS site FantasyUp were eventually rescued by iTeam Network.