INDUSTRY FORUM

  • db730

    Senior VP of Operations

    • 2016 DraftKings FFWC Finalist

    • 2016 DraftKings FBBWC Finalist

    MGT buys DraftDay.com

    Can’t say I saw this coming.

    HARRISON, N.Y., April 1, 2014 /PRNewswire/ — MGT Capital Investments, Inc. (NYSE MKT: MGT) announced today that it has entered into an asset purchase agreement with CardRunners Gaming, Inc. to acquire the DraftDay fantasy sport business and software platform. MGT will pay $600,000 in cash and approximately 100,000 shares of common stock to acquire the DraftDay assets. The transaction is expected to close within one week.

    DraftDay operates one of the industry’s largest and most respected daily fantasy sports wagering sites, ranking fourth highest among competitors in the most recent Alexa reports. DraftDay is also a leader in the popular quick-pick style of skill-based fantasy sports gaming. Andrew Wiggins, co-founder of DraftDay stated, “We have worked tirelessly to build an outstanding product and loyal player base. With MGT’s support, DraftDay will have greater resources to grow this business to new heights. Our employees look forward to making MGT the market leader in daily fantasy sports.”

    Robert Ladd, Chief Executive Officer of MGT, summarized today’s news, “This acquisition represents a unique financially compelling opportunity and tremendous complement to our online gaming businesses. DraftDay will elevate our fantasy sports segment to an entirely new level. We are very pleased to welcome the players and employees of DraftDay.”

    Added Robert Traversa, MGT’s Chief Financial Officer, “Combined with the recently initiated joint venture with Vegas Insider, we expect that the acquisition of DraftDay will be accretive to our operating results, with MGT Sports projected to become cash flow positive by yearend.”

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    @Tippy said…

    Absolutely fascinating. RIP DraftDay. Is there anyone with a business plan at MGT? And how about DK and FD, did they pay MGT to take out the competition? You guys at DK and FD better move them to the top of your Christmas card list.

    Maybe the top sites should send you a Xmas card too. :)

    Wow. I knew it was just a matter of time before the smaller sites merged together or were bought out, but it’s surprising to see the names involved.

    I just want to say thanks to Taylor for all of his insightful posts here. Hopefully, he will stick around.

  • BirdWings

    • x4

      2014 StarStreet MLB Playboy Mansion Finalist

    • MLB 2014 Rankings Leader

    Nice to see Andrew and Taylor cash in and I thank them for building such a well run and classy site. DD is the first I played on years back and have always felt they have done things the right way which speaks volumes to them.

    Although somewhat harsh – I agree mostly with Tippy here and don’t feel good about FTD and MGT management taking over and have no desire to give them any rake.

  • adnoble

    Thank you Taylor and Andrew for everything you have done. I really enjoyed DraftDay!

  • kittenkisses

    @Tippy said…

    Absolutely fascinating. RIP DraftDay. Is there anyone with a business plan at MGT? And how about DK and FD, did they pay MGT to take out the competition? You guys at DK and FD better move them to the top of your Christmas card list.

    Actually I suspect DK and to a lesser extent FD is not happy about this news. DD was a clear 4th but their valuation indicated here is significantly less than what DK/FD has been raising money at. Any future investors may look at this as a bad sign and they are likely going to have a tougher time selling themselves worth 100x+ DD.

  • 2incher

    @sixbits said…

    Regardless of the details and reasons, I think this is a good opportunity to thank Taylor and Andrew for introducing DFS to tons of poker players including me.

    This and Tippy of course.

  • JBigg23

    @Tippy said…

    Absolutely fascinating. RIP DraftDay. Is there anyone with a business plan at MGT? And how about DK and FD, did they pay MGT to take out the competition? You guys at DK and FD better move them to the top of your Christmas card list.

    And 600k? That’s it? You work for 4-5 years on something and sell it for 600k split how many ways? Didn’t FD and DK just get like 12 million plus or something just invested in their business (not what they are worth, that’s simply MORE money thrown into the valuation over and above what was already established). And the fourth largest DFS sites sells for 600k plus some fast sinking MGT stock at $1.90? I respect Taylor and have always thought he was a smart guy and if they were willing to take 600k then that really makes me think there’s something wrong and that they just didn’t see much of a future for DraftDay. IF someone like Taylor with all the gaming and business experience he has can’t make DraftDay work, then is MGT really going to be anymore effective, especially given their track record?

    As for MGT, what exactly is the plan? Are they just going to keep buying lottery tickets until something hits?

    1) They buy FSL and say Blinders has some great ideas that will be huge. That didn’t happen.

    2) They buy Daily Joust and try to make something out of that. That didn’t work out too well.

    3) They buy FTD and try to make that work. Hasn’t really done much. They hire and fire the sex offender guy. They screw up the tax issues. They change the TOS in the middle of the game.

    4) They then hire Condia and Lucror, who they say are going to revolutionize the industry for FTD. Haven’t seen anything resulting out of that other than they cannibalized their largest rake producers.

    5) They buy DraftDay and hope maybe this is the winning ticket. Are we just going to scrap FTD or are we going to pay double salaries, twice as many employees, double advertising for each site separately? Why would you pay double expenses like this? It’s like getting married and still keeping two households.

    Who is making these decisions and what exactly is the plan? So what is next when the 600k DraftDay purchase doesn’t really pan out like all the others before it?

    I don’t know, seems like a green business student could make more efficient decisions than what has taken place here. I still have this fear that MGT is going to somehow damage the DFS industry. I hope I’m wrong.

    +1

  • lilprog

    • Blogger of the Month

    @sixbits said…

    Regardless of the details and reasons, I think this is a good opportunity to thank Taylor and Andrew for introducing DFS to tons of poker players including me.

    This… And I`m sticking around for now…

  • Danwahoo

    • 2013 FanDuel WFFC Finalist

    In all honesty, it is crazy how accurate Tippy is on this and other situations throughout RG forums. I’m fearful of the same, Tippy.

  • bestintheworld

    BITW

    checks calendar

    Yeah… I’m not buying this. :)

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    Alright, I’ll be that guy – how does this transaction impact condia/1ucror’s and each site’s respective employees’ ability to play on DraftDay and FTD? I know they are operationally separate entities at this point, but with common ownership, that could look bad.

  • nbonaddio

    • 752

      RG Overall Ranking

    • 2015 FanDuel NBA Playboy Mansion Finalist

    @Danwahoo said…

    In all honesty, it is crazy how accurate Tippy is on this and other situations throughout RG forums. I’m fearful of the same, Tippy.

    I have absolutely no idea how this DOESN’T end up as a huge black eye. Take a look at their SEC filings, and tell me how this ends up a success.

    I don’t know anyone involved in this personally, but the salaries that MGT’s executives are paying themselves weighed against the performance of the company, their future prospects, and the related stock price borders on grounds for a class-action suit.

  • jecarl2

    I didn’t read all of these but it seems to me that FTD did not recover from this summer and is attempting to re-brand itself by buying out DD. +1 to Tippy as well

  • easternmh

    • x3

      Blogger of the Month

    How many draftday employees/reps are being retained? If any?

  • iSplashRollz

    @easternmh said…

    How many draftday employees/reps are being retained? If any?

    Scott and Ryan are staying, which is good news.

  • Ross

    Not sure how I feel about this.
    I played quite a bit on DD for a while and liked the product they offered.
    I was definitely considering returning some play there but now I’m not sure.
    Would like to see 1ucror/condia post their thoughts on this here.

    Also, it would be great to hear from Taylor in this thread. He is one of the most knowledgeable people in this business and it will be interesting to see what his next move is.

  • fishcakeking

    FCK

    This is best move ever from business perspective in dfs history. Mgt has a crappy platform, but access to capital to market the product. Draftday was in opposite situation.

    The dd platform was worth the price MGT paid.

    Sad to lose some of the smart guys like Taylor from the industry. Although I think is a smart business move.for.all involved I don’t think it’s a good sign for dfs.

    FCK

  • mrathburn

    @fishcakeking said…

    This is best move ever from business perspective in dfs history. Mgt has a crappy platform, but access to capital to market the product. Draftday was in opposite situation.

    The dd platform was worth the price MGT paid.

    Sad to lose some of the smart guys like Taylor from the industry. Although I think is a smart business move.for.all involved I don’t think it’s a good sign for dfs.

    FCK

    As Tippy said, its hard to trust MGT based on their track record. I agree solid move and the DD guys will be missed, but I have a lot of doubt that MGT will not find a way to screw this up also. DD has been my favorite site to play on. From their brackets, player cards, decent size GPPs + pay trails (100-300 is more what I prefer, not a field of 7000 that only pays 10% of the field), and great live scoring that really raised the bar, they were ahead of the curve in many areas.

  • SoSoFishy

    @Tippy said…

    Absolutely fascinating. RIP DraftDay. Is there anyone with a business plan at MGT? And how about DK and FD, did they pay MGT to take out the competition? You guys at DK and FD better move them to the top of your Christmas card list.

    And 600k? That’s it? You work for 4-5 years on something and sell it for 600k split how many ways? Didn’t FD and DK just get like 12 million plus or something just invested in their business (not what they are worth, that’s simply MORE money thrown into the valuation over and above what was already established). And the fourth largest DFS sites sells for 600k plus some fast sinking MGT stock at $1.90? I respect Taylor and have always thought he was a smart guy and if they were willing to take 600k then that really makes me think there’s something wrong and that they just didn’t see much of a future for DraftDay. IF someone like Taylor with all the gaming and business experience he has can’t make DraftDay work, then is MGT really going to be anymore effective, especially given their track record?

    As for MGT, what exactly is the plan? Are they just going to keep buying lottery tickets until something hits?

    1) They buy FSL and say Blinders has some great ideas that will be huge. That didn’t happen.

    2) They buy Daily Joust and try to make something out of that. That didn’t work out too well.

    3) They buy FTD and try to make that work. Hasn’t really done much. They hire and fire the sex offender guy. They screw up the tax issues. They change the TOS in the middle of the game.

    4) They then hire Condia and Lucror, who they say are going to revolutionize the industry for FTD. Haven’t seen anything resulting out of that other than they cannibalized their largest rake producers.

    5) They buy DraftDay and hope maybe this is the winning ticket. Are we just going to scrap FTD or are we going to pay double salaries, twice as many employees, double advertising for each site separately? Why would you pay double expenses like this? It’s like getting married and still keeping two households.

    Who is making these decisions and what exactly is the plan? So what is next when the 600k DraftDay purchase doesn’t really pan out like all the others before it?

    I don’t know, seems like a green business student could make more efficient decisions than what has taken place here. I still have this fear that MGT is going to somehow damage the DFS industry. I hope I’m wrong.

    I’d like to try and answer some of your questions. At least I’ll tell you what I get from this.

    I think you have taken the wrong perspective. The tax thing. I mean looks like they just messed up and made a mistake. I’m under the impression the fixed the mistake pretty quickly. I know they updated the TOS. But maybe their attorneys suggested for them too. Seems like they are new in the industry. And understandably was thinking what was best for the business. Then when players figured out what happened outlashed but it was fixed.

    As far as that I don’t know what else they have done and what track record you guys are talking about. But I have to say. I love what they are doing and I think everyone should buy into the stock and these guys and give them support.

    So let me try to shed some perspective. As a former online player I was a long time subscriber to Card Runners. I’m not sure who Taylor is as most of the people I knew were screen names not real names. But it matters very little.

    One thing I know about Card Runners were they were very business savy. They were the first major training company and set the standard. They had deals with the 2nd largest site and got members and advertisement there. If they started Card Runners these guys are intelligent. Very intelligent. And yes it would be a good move to get out if something bad was coming.

    But all the evidence suggest nothing bad is coming to DFS. Big companys that have their hand in politicians pockets are investing 7 figures in these companies. And Fantasy sports is backed by the Major League Assosciations.

    The worst outcome I see possible for DFS. Is the NFL wanting to be the first one in. Kind of like casino owners for online poker. They went from not wanting it to be legal to wanting it to be legal but all of the established sites cant get a license for 5 years…..

    That’s the only thing that could happen. I don’t see them doing away with this. As this will only boost the sports popularity which increases the NFL’s revenue. Wait until theres a DFS super bowl commercial. Wait until NFL MLB endorse this. I’m sure there are talks going on behind closed doors.

    The NFL is very secretive if you don’t know. But their track record is impeccable. So follow the NFL and I would guess you’re gonna be ok. But anyways they are some of the smartest minds in the world. They will see the money in this and they will make the best move. Its new and they are prolly trying to figure out what the best move is.

    That leads me to my next point Tippy. 600k is very low for this deal. The fact that these guys took it. It seems like Taylor values the large amount of stock they got over the buy out. Have you ever heard the term FreeRoll?

    They spent 5 years building what they did at DD. Now they each got 300k and they have 100k shares. That if MGT succeeds. That without anymore of their money. They will have a large sum in a company that has more captial than they do.

    I’m sure Taylor hasn’t been able to get his FTP money. Because Affliates weren’t paid out. And I’m sure Card Runners was one of the biggest affliates. I don’t know his money situation but I’m sure he lost a bit in FTP. Hopefully I’m wrong and he got his.

    Now what I love about MGT. IS the fact that they are innovative. They’ve been buying sites. They signed a professional player. One of the best professional teams in the industry to take advice.

    Now hear me out. That sounds like good news for all of us. They are taking advice from a professional DFS player. One who seems highly intelligent. What if Condias advice was. Spend the money on a better interface. And bam today happened?

    It sounds like MGT has purchased a large amount of employees. So now they have the programmers for all those sites you named? What if all those programmers are working together on a super merged site to be unveiled later.

    I imagine a full re-do and new programming would take time. I’m sure the code has to be re-written and they will prolly do like Merge. And offer different skins. But have the same player pool.

    What if Taylor is planning on doing a Card Runners DFS? What if Condia is going to offer training and videos? Can MGT now say they have Condia and Taylor teaching players how to get good? And do you think that might market well?

    As far as you being an attorney I’m not. As an owner of a site. Could Taylor have signed a contract being an employee of the site? Is that legal?

    But reguardless they each cashed out today with 300k. And I’m sure MGT had to show them that business plan you want to see. I’m guessing that they like what they saw. And I bet Condia had a big part in this.

    You keep saying you haven’t seen anything yet. What if this was Condias first advice? I don’t know to be true but we don’t know it not to be. And I have to imagine he was at least consulted on this. That’s what he was hired for?

    Most importantly who would you want to be consulting us? They spent big money. Took away their best customer and turned him into an employee. Talk about balls. I mean that’s unheard of. It’s either stupid or Genius. But with the other FACTS i like the odds of Genius.

    Now my final point. You want them to show you their business plan? Do companies usually share this info? I have some I’d like to see if so. Wouldn’t the best strategy be not to share the business plan and take their competition by storm?

    I just think you jumped the gun and came to a conclusion too fast. And the theory that Taylor sold out because of bad news seem more unlikely. What are the FACTS?

    As you pointed out.
    Taylor is smart.
    600k seems low.
    Large amount of shares.
    DD reps saying they feel this is best for their customer. If you think taylor is such a great guy. Would he lie? Would his partner lie about this? Is that the kind of person he is? It makes sense to say if your point was true. But we have to use some logic here.

    Last but not least MGT is dumping large amounts of money. And said this is the first part of their plan. They want to be the biggest. You know how become the biggest? By hitting your competition by surprise.

    Buy this stock people. If I wasn’t broke I would.

  • sportsgrinder

    • Blogger of the Month

    Draftday is my favorite site to play on, and I’m a little disappointed that they aren’t going to be independent anymore.

    However, I’m not sure if the DD guys end up with much of anything after this deal.

    I would think the VC that invested in DraftDay would get some chuck of this buyout.

    There was 875K invested by Lightbank in early 2012, but Taylor didn’t disclose what percentage of the company they gave up for that. That is when they were pretty new and had “10,000 registrations” according to the article.

    So the fact that about that much buys the entire company today isn’t that great a story to celebrate. Sure the stock aspect could still let them make out in the long run(I hope this is the case), but it just shows how difficult this business is when the #4ish site appears to be worth less 2 years later.

  • SoSoFishy

    What is their stock worth now?

  • nymjjb

    1 buck and 90 cents

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @sportsgrinder said…

    Draftday is my favorite site to play on, and I’m a little disappointed that they aren’t going to be independent anymore.

    However, I’m not sure if the DD guys end up with much of anything after this deal.

    I would think the VC that invested in DraftDay would get some chuck of this buyout.

    There was 875K invested by Lightbank in early 2012, but Taylor didn’t disclose what percentage of the company they gave up for that. That is when they were pretty new and had “10,000 registrations” according to the article.

    So the fact that about that much buys the entire company today isn’t that great a story to celebrate. Sure the stock aspect could still let them make out in the long run(I hope this is the case), but it just shows how difficult this business is when the #4ish site appears to be worth less 2 years later.

    This pretty much sums it up. Not a positive development at all.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    I’m really excited to see Tippy’s response to fishy’s essay.

  • EmpireMaker2

    @SoSoFishy said…

    What is their stock worth now?

    You wrote a book of a post and then said I would buy this and then don’t know what price the stock is at. There’s a reason why MGT doesn’t care if they hand over stock like candy. The company doesn’t have any value. They operate a bunch of failing business now including Draftday. You think being a patent troll is worth anything? The Supreme Court and every court have been all over patent trolls recently trying to shut this practice down entirely. It’s all a cover for buying time. Where or when have MGT at any point proven they have competent management to run a dfs site or any business? Every business Robert Ladd has run has been run into the ground for the profit of upper management. There is a reason why DD is selling at such a low rate and to such a super shady company. Means one thing that DD was bleeding money so bad they couldn’t afford operating costs. They simply had to get rid of the business asap to any buyer. I don’t have a lot of respect for that, but no one really seems to care in fantasy. I would just remind people to watch your player funds and remember who is actually running the sites you play on.

  • SoSoFishy

    @EmpireMaker2 said…

    You wrote a book of a post and then said I would buy this and then don’t know what price the stock is at. There’s a reason why MGT doesn’t care if they hand over stock like candy. The company doesn’t have any value. They operate a bunch of failing business now including Draftday. You think being a patent troll is worth anything? The Supreme Court and every court have been all over patent trolls recently trying to shut this practice down entirely. It’s all a cover for buying time. Where or when have MGT at any point proven they have competent management to run a dfs site or any business? Every business Robert Ladd has run has been run into the ground for the profit of upper management. There is a reason why DD is selling at such a low rate and to such a super shady company. Means one thing that DD was bleeding money so bad they couldn’t afford operating costs. They simply had to get rid of the business asap to any buyer. I don’t have a lot of respect for that, but no one really seems to care in fantasy. I would just remind people to watch your player funds and remember who is actually running the sites you play on.

    So you’re saying they are liars? That they don’t believe this was best for their customers? Do you think Condia is an idiot? He signed with them because he thinks they will fail? Do you have any proof of this?

    Patent troll? So someone going after the law is a troll now? Isn’t that what the patents are there for. So people can’t steal your ideas? How do you tell the difference between a troll and a serious case?

    What if Ladd learned something? Seems like he’s been trying to be innovative. At least in this approach.

    I would buy stock in this company because they seem to be thinking outside the box. They seem to be making good moves. How do they make money buying a failing company?

    1.90× 100,000 = 190,000 + 600,000 = 790,000. They got almost their initial investment back. That I’m guessing MGT now has the obligation to pay back. And if MGT succeeds they can still profit big?

    Seems like a nice option. Maybe it is failing. But is Ladd really that stupid? How was he able to get people to fund so much money? Is it really that easy? To get millions thrown at your company?

    Where are you getting your info. What is your source? How do you know DD was bleeding money? How do you know MGT doesn’t have a plan? I’m just wondering are you a psychic ? What’s the lottery numbers for the next 500$ million powerball?

    And where has anyone proved they can run a DFS business? It’s pretty new as far as I see. Looks like a lot of them have failed. Maybe MGT does too. But they aren’t following FD or DK path and aren’t settling for 4th.

    I guess Taylor will be selling his 100k shares soon? I mean mine as well cash now before they bottom out right? I mean I’m sure he likes to light 190k on fire.

    Good to know that Taylor and the guys at cardrunners are scummy people. And will lie to all of us and say anything as long as they profit.

    Curious. Has Taylor or the founders at DD ever prove they would lie in this situation? If so note this so in the future you never do business with them. I mean Ladd may have had other companies fail.

    But pharm companies. lol. Talk about having their hand in politicians pocket. There’s more to running those businesses then just business. Same thing for this and casinos. But seems like maybe they have the right people on their side this time.

    Is MGT sueing Venetian? I could see Adelson being on MGT’s side. And having them go after Ceasers. As he already has stated he would spend whatever possible to make online poker illegal. Ceasers has Games online now. He wants to take them out. And losing this case will prolly send them under. Or will cripple them. They are already down.

    But what my point is. These guys are thinking innovative. And seems like they are trying to do the right thing. Maybe it’s all a scam. You could be right. But any site could be a scam.

    What exactly did he do wrong in those other companies? Why would these people throw millions at a loser?

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