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  • jeffgo33

    http://www.nytimes.com/2016/10/24/sports/draftkings-fanduel-daily-fantasy-near-settlement-with-new-york-state.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news

    The daily fantasy sports companies DraftKings and FanDuel are nearing a settlement agreement with New York’s attorney general over claims that they engaged in false advertising when they spent nearly a half-billion dollars blitzing the national airwaves with commercials last year, according to two people familiar with the discussions who spoke on the condition of anonymity because negotiations were continuing.

    The agreement with the attorney general, Eric T. Schneiderman, was expected to cost the companies a total of $8 million to $12 million, according to the two people. It would also require the companies to acknowledge the findings of Mr. Schneiderman’s investigation into fraudulent practices and perhaps require them to institute even stronger consumer protections than those adopted in August when Gov. Andrew M. Cuomo made the games legal in New York.

    DraftKings and FanDuel are so short of cash, according to the two people familiar with the negotiations, that they have asked Mr. Schneiderman’s office if they can pay the final settlement in installments, and they have conceded that they are having difficulty meeting their day-to-day obligations.

    Within the past three weeks, the New York-based FanDuel has laid off more than 60 people, and both companies have acknowledged that they are months behind in their payments to vendors, especially to the array of public relations and lobbying firms that they have employed across the nation to persuade individual state legislatures to legalize daily fantasy games — the most critical component of rebuilding their business.

  • g_nagy

    @elementasrat said...

    Damnit, I’m at a crossroads. I withdrew from DK and got my money this afternoon. Thinking about Yahoo but the prize pools are so low compared to DK. Any ideas?

    I’m pretty similar as you, and I’ll be playing at the Y. Sure, hoping for the 5 figure payday on DK or FD is nice, but it will likely never happen. I did plenty fine on the Y last year after starting in March for NBA season and plan to do the same this year

  • infinite420

    i wish we could get draft street back(with a 21st century interface).

  • PJGuin23

    DFS Tax Guru

    @Heterodox said...

    People play the lottery because it requires zero effort while offering some chance of a payoff. DFS takes time and effort, and when you lose it hurts. The comparison does not hold, yet it gets made all the time.

    No arguing the effort factor and skill level vs the lottery. That’s why I’m thinking 20-25% after the dust settles and regulatory compliance factors in. I’m afraid without it, people will not only not play but many will leave. My point was not everyone thinks like a Pro and would play with a 25% rake if it was at least perceived as safe and fair. Regulations can be a good thing and in fact may very well save DFS in general.

  • KindGuy

    @g_nagy said...

    I’m pretty similar as you, and I’ll be playing at the Y. Sure, hoping for the 5 figure payday on DK or FD is nice, but it will likely never happen. I did plenty fine on the Y last year after starting in March for NBA season and plan to do the same this year

    Too late, I already redeposited onto DK. Haha, once I hit that GPP bink I’ll be outta there!

  • rj3494

    Eric Schneiderman is in bed with the casino industry. http://nypost.com/2015/11/16/casinos-hit-jackpot-in-schneidermans-fantasy-sports-crackdown/ His plan was to legalize fantasy sports all along but take down Fanduel and Draftkings in the process opening the door for the casino industry to take over DFS. Looks like his plan is working!

  • Heterodox

    @PJGuin23 said...

    My point was not everyone thinks like a Pro and would play with a 25% rake if it was at least perceived as safe and fair. Regulations can be a good thing and in fact may very well save DFS in general.

    So, I think we’re talking about two different things here. My original point was a general one about the rake mattering even if people aren’t paying attention to what it is. I don’t really think that’s debatable.

    At what level does it become prohibitive? I have no idea, because you can’t just consider the rake in a vacuum. In a 25% rake environment, what does the ecosystem look like? What do the prize pools look like? Is it 25% across the board, or are there lower-rake contests being offered? What has to happen before we get there, that might affect the way people view the game, or affect their eagerness to play it?

    I think the idea that people will play because people want to play is too rosy a view. DFS is a grueling game. It requires a lot of time and effort even if you’re bad. It involves a willingness to lose often even if you’re good. It requires you to play – win or lose – for a long time before you even know if you’re any good or not, and it can fool you, or leave you constantly questioning.

    For the record, I am not one of these rake-obsessed mavens. I’m not a pro. I don’t scream that the sky is falling every time the rake goes up a point, and I’m definitely not surprised when a company raises the price it charges, either because they are struggling to pay their bills or simply because they think people are willing to pay the higher price. I just think that it matters, whether or not casual players are paying attention to it.

  • Heterodox

    @fishcakeking said...

    A merger will likely happen, but I think one site is wating for the other to get really desperate and have no choice.

    We know that Drape is a guy who writes things in a way that will cast DFS – or at least DK/FD – in a negative light, but why do you think this, if you don’t think there’s anything to the report? Why would either think the other would get “really desperate” if neither is in trouble?

  • deactivated60279

    You see a decent amount of “Pros” selling content and selections recently. It seems like their edge is diminishing if not gone. If that statement is true, The people DK catered to, failed to enforce rules on, and depended on for their rake, may not play as heavy. The ecosystem is disastrous especially if it’s true that customer retention is awful (that’s what I hear but it’s unconfirmed) and there are fewer new players and fish (again not sure but fewer commercials) This sounds like a bad recipe for the future. Most certainly 1 major site can make it but the game itself is in trouble. That said, I hope it all works out some how.

  • Heterodox

    @fishcakeking said...

    I have little doubt that some vendors arent being paid, but these are likely some of the crazy deals the sites signed during mega expansion and now they are leveraging to renegotiate,

    “and both companies have acknowledged that they are months behind in their payments to vendors, especially to the array of public relations and lobbying firms that they have employed across the nation to persuade individual state legislatures to legalize daily fantasy games — the most critical component of rebuilding their business.”

    Did Drape infer the “especially to the array of public relations and lobbying firms that they have employed across the nation” part, or is that part of what “both companies have acknowledged”?

  • fishcakeking

    FCK

    @Heterodox said...

    We know that Drape is a guy who writes things in a way that will cast DFS – or at least DK/FD – in a negative light, but why do you think this, if you don’t think there’s anything to the report? Why would either think the other would get “really desperate” if neither is in trouble?

    It is my opinion that one of the two sites has faired much better through the tumult of the past year. the future will be to get smaller or merge. Investors will likely see more vale in the latter.

    FCK

  • fishcakeking

    FCK

    I just reread article and it was far more detailed than one I read last night.

    I retract most of what I said. Details were included in expanded article.

    FCK

  • jeridanj84

    FanDuel and DraftKings have raised close to a billion dollars in funding, if they merge (assuming it’s allowed) all of this drama will eventually go away.

  • PJGuin23

    DFS Tax Guru

    @Heterodox said...

    So, I think we’re talking about two different things here. My original point was a general one about the rake mattering even if people aren’t paying attention to what it is. I don’t really think that’s debatable.

    At what level does it become prohibitive? I have no idea, because you can’t just consider the rake in a vacuum. In a 25% rake environment, what does the ecosystem look like? What do the prize pools look like? Is it 25% across the board, or are there lower-rake contests being offered? What has to happen before we get there, that might affect the way people view the game, or affect their eagerness to play it?

    I think the idea that people will play because people want to play is too rosy a view. DFS is a grueling game. It requires a lot of time and effort even if you’re bad. It involves a willingness to lose often even if you’re good. It requires you to play – win or lose – for a long time before you even know if you’re any good or not, and it can fool you, or leave you constantly questioning.

    For the record, I am not one of these rake-obsessed mavens. I’m not a pro. I don’t scream that the sky is falling every time the rake goes up a point, and I’m definitely not surprised when a company raises the price it charges, either because they are struggling to pay their bills or simply because they think people are willing to pay the higher price. I just think that it matters, whether or not casual players are paying attention to it.

    25% was an arbitrary number I’ll admit. But keeping DFS safe, legal, regulated and not perceived as “rigged” may require that or give/take 5-7% either way. We’d all like 0% rake, but the sites need to keep the lights on, the lawyers paid, the bro-mercials at least somewhat running and the politicians greased.

    Ideally, there will be a comprehensive iGaming bill at the Federal level tackling this so the sites don’t have to knuckle drag state by state. If some states are getting tax revenues and fees out of this, don’t you think others will follow suit? And what makes you think some other AG won’t follow in Eric Schneiderman’s shoes? The Delawares, Alabamas and Nevadas will eventually add up and stifle revenue growth. It’s a vicious cycle. Paying lobbyists and Lawyers in each state is not cheap. Giving up on states without a fight is not good either. Plus the VCs will want to see financials not showing bleeding cash before more money is infused.

    I don’t know what the right balance is. Just tossing ideas out there. My guess is a higher rake won’t deter people but I could be wrong. Right now, my educated guess is most people playing now are rake conscious. Unfortunately we also need to attract people who aren’t but have no issues mindlessly playing lottery and slots.. or people who like to bet on their favorite teams but can’t in 48 states. The industry was growing on the latter but I feel fled once the bad news happened.

  • njsum

    @PJGuin23 said...

    I beg to differ. I predict higher rake could mean less “Pros” and more Casual entrants. Again, look at the lotteries at 50% rake. As long as it’s seen as safe and not rigged, people will play. The public is not there yet, but wants to be.

    IMO you’re comparing apples to oranges here. There are few if any similarities between the lottery and dfs other than the chance of winning big money with a small investment.

    High volume players play DFS because they feel they are good enough to beat the rake, build a bankroll, and possibly make a living. Not saying this is easy yet it can be done. no one playing the lotto is trying to “build a bankroll” and make a living.

    At a 25 percent rake or higher there will be a scarce few if any people who can remain profitable. since a small number of players (the pros) make up a large percentage of the volume played on DFS sites, if they no longer feel they can beat the rake, they will move on. as will most non pros who have a understanding of what rake is, which is more people IMO than you think.

    Now why would anyone (talking about casual entrants as well) put in so much time and effort playing a game with the same odds of the lotto, when they could just buy some lotto tickets and have the same odds without spending hours researching? im not saying DFS players would play the lotto if the rake got ridiculous, they would most likely just stop playing dfs and not play the lotto. A low enough rake is needed to keep the companies profitable and high volume players participating.

    Ideally, the sites would find a way to lower the rake and increase profitability through advertising, which they have started to do.

  • kmsurfs2000

    I dont see how some can say with a grain of salt that they will be fine. I suspect many of the folks that invested with bernie thought their funds were “safe”-not saying this is a ponzi scheme by any means but if the article is accurate, it is VERY concerning. Not paying vendors means you have no liquid capital and unless there is an infusion of cash the end may possible.

    Unless I hear some strong statements from both companies about their finances that can be verified , I wont keep much money in my accounts and have concerns about getting paid should I ever hit the “big one”

  • BigRay

    I do not think “Fandual” and “Draftkings” will survive as the brands. They have been tainted by gov’t lawsuits, company insider info incident, and pissed off a lot of people with their over/“false” advertising. I hope what ever shakes out of this first run is much better. It is good to see more sites opening up and some big shoes getting in. My online casino had DF football last year but not this year. If the sites are smart they should sell out to a bigger entry that could drive customers from a bigger base and put a name on it people trust.

  • danilo

    I don’t know much about the legal issues but would there be anything keeping other states from seeking settlements as well?

  • Jcb890

    @danilo said...

    I don’t know much about the legal issues but would there be anything keeping other states from seeking settlements as well?

    I’m no lawyer, but it seems like if they are admitting guilt in one instance, others will stand a much better chance of winning or requiring them to settle.

  • Jcb890

    @dude_abides7 said...

    They are only “fighting for DFS” because of the poor, short-sited way they managed their companies. The are only “fighting for DFS” because they decided to ignore public outcry, red flags and the voices of 98% of their user base and rather catered to the 1% of that base that was winning 95% of the money and pushing their rake.

    They are here because they decided to dig their heads in the sand and go invisible when they needed to be transparent. 90% of where the industry is today could have been avoided if these companies were run smartly from the get go. I have zero sympathy for them. These are/were self induced wounds. They were greedy. They were ignorant. They were stupid. They deserve it.

    Unfortunately, we are all gonna pay in the end.

    This post is pretty much spot on. They have brought this upon themselves with how they have dropped the ball at every possible opportunity. Both companies have also had flat-out pathetic PR teams from the beginning. It really is unbelievable some of those people still have their jobs with how terrible a job(s) they have done. I don’t wish anyone’s livelihood be taken away, but if you are terrible at your job yet still making a lot of money, why are you still there?

    Perhaps people are seeing through the thin veil of the “Community Guidelines” or whatever BS they are deciding to put out there. Perhaps the common man is finally seeing all of these highly experienced players loading up in $.25 and $1 games. Before they were just names people might recognize, now people can see the badges (which still don’t help other than to try and avoid). Perhaps people see that the companies aren’t actually enforcing these new rules or doing anything other than saying things that might sound nice. Perhaps new players are sick of being thrown in the same lobbies as someone with a bankroll in 6 figures.

    For F’s sake guys… if EA Sports/XBox can figure out how to match 2 players of similar skill in a lobby within seconds, these sites can do something about the “fish” being screwed constantly. The problem is that they do not care. Period.

  • PJGuin23

    DFS Tax Guru

    @njsum said...

    IMO you’re comparing apples to oranges here. There are few if any similarities between the lottery and dfs other than the chance of winning big money with a small investment.

    High volume players play DFS because they feel they are good enough to beat the rake, build a bankroll, and possibly make a living. Not saying this is easy yet it can be done. no one playing the lotto is trying to “build a bankroll” and make a living.

    At a 25 percent rake or higher there will be a scarce few if any people who can remain profitable. since a small number of players (the pros) make up a large percentage of the volume played on DFS sites, if they no longer feel they can beat the rake, they will move on. as will most non pros who have a understanding of what rake is, which is more people IMO than you think.

    Now why would anyone (talking about casual entrants as well) put in so much time and effort playing a game with the same odds of the lotto, when they could just buy some lotto tickets and have the same odds without spending hours researching? im not saying DFS players would play the lotto if the rake got ridiculous, they would most likely just stop playing dfs and not play the lotto. A low enough rake is needed to keep the companies profitable and high volume players participating.

    Ideally, the sites would find a way to lower the rake and increase profitability through advertising, which they have started to do.

    My last post insinuated that it would be between a rock and a hard place if more states started following NYS. Rake would certainly have to increase to keep legislators and AGs at bay along with VC investors.

    We’re still waiting for Illinois and Texas. Legal clarity is still being hashed out in California and Pennsylvania. 1st 2 are on thin ice. Latter 2 could soon have an activist AG that could mess with DFS. Add in the potential for another Alabama, Idaho or Delaware out of the blue. Not looking good if short on Cash.

  • PJGuin23

    DFS Tax Guru

    25% is on the higher end I’ll admit. That’s my guess as to what the Upper Limit would be if Casual players felt safe and secure with DFS. Will it have to increase from the current 7-15% average? Likely. Other states are looking at NYS and certainly want a piece of the pie or they will make legal troubles.

  • njsum

    @PJGuin23 said...

    My last post insinuated that it would be between a rock and a hard place if more states started following NYS. Rake would certainly have to increase to keep legislators and AGs at bay along with VC investors.

    We’re still waiting for Illinois and Texas. Legal clarity is still being hashed out in California and Pennsylvania. 1st 2 are on thin ice. Latter 2 could soon have an activist AG that could mess with DFS. Add in the potential for another Alabama, Idaho or Delaware out of the blue. Not looking good if short on Cash.

    Im not disagreeing that rake may need to be raised a little in the short term to meet certain obligations, yet I dont think its the long term answer. my argument was that using the lottery as a baseline for high how the rake can go, doesnt make sense as for reasons I laid out earlier, as they are completely different animals.

  • pointsmuncher

    @Jcb890 said...

    For F’s sake guys… if EA Sports/XBox can figure out how to match 2 players of similar skill in a lobby within seconds, these sites can do something about the “fish” being screwed constantly. The problem is that they do not care. Period.

    This. The game advertised (outside of the Millionaire Maker lottery type) is Joe Smith in Toledo is a casual fantasy player and he’d love to wager $5 against a Joe Smith 2 in Nashville who is also a casual player looking to spice up his Sunday a bit by choosing a team. This notion, at its core, would be great and fun. The ability to do this and not instantly have your game scooped up by a top 10 or top 50 player in the country would be ideal. The key to retaining players is to allow them to feel some success when they play. I’ve referred 10 people or so to Draftkings and none of them play anymore. They deposited $20, $50, or $100 and lost it that was that. Even if Draftkings doubled the deposit it wouldn’t matter. Finding the game unbeatable for a novice player who doesn’t research or listen to podcasts or study matchups probably sets a company up for a 95% churn rate right out of the gate. Selling a dream in commercials showcasing millionaire winners is fine but at some point the desire to win a million dollars crosses paths with the 3rd or 4th redeposit and most people are going to abandon ship pretty quickly. Poker was such a similar case study. Poker even had an advantage in that a new player deposits $25 and plays at the $.05/.10 tables for fun and sharks wouldn’t bother them because it wasn’t profitable to go down that low. They had areas that simply weren’t worth the time of the sharks. Anyway, to circle back, if Joe Smith wants a $5 H2H and SaahilSud scoops it then it isn’t H2H, its Joe vs Saahil, and Saahil’s 3 assistants, and his quant, and whoever else he uses to find any conceivable bit of skill to squeeze value out of before turning the game over to luck. Eligibility to scoop a H2H should be determined by amount of H2Hs entered that week. Joe enters 1 H2H, he should only be able to get a match against another player entering only 1 H2H that week.

  • Unico10

    • 606

      RG Overall Ranking

    • Ranked #96

      RG Tiered Ranking

    @pointsmuncher said...

    Anyway, to circle back, if Joe Smith wants a $5 H2H and SaahilSud scoops it then it isn’t H2H, its Joe vs Saahil, and Saahil’s 3 assistants, and his quant, and whoever else he uses to find any conceivable bit of skill to squeeze value out of before turning the game over to luck

    ^^^ THIS ^

  • Jcb890

    What is the O/U on number of pages before one of the “pros” or bigger budget players comes in and tells us about how them max-entering the $0.25 Arcade doesn’t make a difference or that it doesn’t matter that they scoop all of the newbie $1 H2H’s. I’ll provide the answer before there’s even a mention because this comes up every single time – YES, we realize that it is up to the sites to police things and not up to the user to limit the amount of money they can make. Morals have no place in this industry where money can be made. We get it.

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