Archive for draftkings

This is the Way Daily Fantasy Ends — Not With a Bang, but With a Whimper

Last night, I was at a fantasy draft party (12-team auction, for those who care). The television was on in the background as people were preparing their spreadsheets and whatnot, when an ad for a daily fantasy sight came on. I’m not being coy be neglecting to mention which one, I honestly don’t remember. Those ads are so ubiquitous, that they rarely seem to grab anyone’s attention, but when it came on the TV at the party, a guest looked up and said “do people still do that?” He was being a bit facetious, of course, as people certainly still do, but we might be honestly getting to the point where scandal and legal hassles the constant state of flux of the industry might be enough to lay daily fantasy — or at least the behemoth it has shown to be not terribly long ago — to rest.

The most recent cut-down of daily fantasy comes in the form of an announcement that DraftKings and FanDuel will cease offering contests that include NCAA games. Reading between the lines, it appears as if the NCAA was giving DraftKings and FanDuel the business, and since college sports were a minor part of the business and the two companies already have enough legal stuff to deal with, they threw in the towel.

It’s those legal troubles that would most likely spell doom for the two companies, should that come to pass. The bottom line is that many states are now looking into whether daily fantasy should be considered gambling. If it is, then it can’t be allowed to occur on the Internet thanks to the Federal Wire Act that, although its reach has been questioned, states that bets cannot be placed over communication channels like phone or Internet lines. As of this writing the commonwealth of Virginia has allowed daily fantasy to take place on its soil, so long as certain restrictions and regulations are in place. New York State originally filed an injunction to stop daily fantasy operations, then was overruled, but in the end FanDuel and Draftkings stood down on the issue, hoping that legislation will be passed allowing their sites to continue operating in the state. Yahoo! Daily Fantasy volunteered to do so as well, seemingly to remind the general public that they exist.

The legal back and forth will be a very interesting one to watch, with many ramifications involved. The things is, if litigation and appeals and everything else involved in the process goes on as long as it looks like they will, none of this might even matter. If daily fantasy doesn’t burn out, it might just fade away.

FanDuel and DraftKings will always have their loyal customers — those who spend lots of time and money on these sites and who will be watching in earnest as the rulings and laws come down state by state. These people aren’t who daily fantasy sites should worry about. They need to worry about the casual player, the person who gets the wild idea to drop $10 or $20 or $50 on a random contest one Sunday to try their luck. The common person. The square. This is who these sites need.

Remember, none of these sites actually care about how any one player does. They don’t lose money if Andrew McCutchen has a better night than Mike Trout. They just let the players duke it out while they take their 10% off the top. The model is pretty much the same for sports betting at casinos. The casinos want an even amount of bets on either side. The losers pay the winners and the house gets the juice. DraftKings and FanDuel acutally have a better model. The casino can still get hosed on a one-in-million bet cashing in. Daily fantasy doesn’t give a crap. It just needs players. It needs bodies that are willing to pay a fee (and forget that the odds are stacked against them) so that it can take its share. But without Joe Sixpack kicking in his money, there is less of a pot to skim from.

The big hitters and the sharps will still have their high-stakes games. If they live in a state where the contests are banned, they’ll find shady workarounds to keep playing. But your coworker or next-door neighbor won’t. If they can’t play, they’ll … just stop playing. And even if the laws are changed or massaged enough where they could theoretically start again, most won’t, or at least not as much. The thrill will be gone. Daily fantasy’s biggest enemy isn’t the law, it’s attrition.

FanDuel and DraftKings aren’t just interested in a positive decision, they need a fast positive decision. Time is of the essence here, as they need to both counter rulings and legislation against them in some states while regaining the right to do business in other states all in a timely enough fashion that the public doesn’t forget about them. So far, it’s not looking good. Layoffs are happening. Funding and partnerships are being pulled. All this effort may end up being just some rearranging of deck chairs.

This is not to say that these companies can’t make a comeback. If they laws fall in their favor, and cloud of doubt is blown away from the industry, the investment money and partnership deals will come rolling in right quick — no hard feelings, right? And maybe they can gain a second wind and intice people into coming back (now 100% legal!) And we may once again be carpet bombed with ad after ad regaling us with stories of average people becoming millionaires overnight. But some serious legal kung fu has to happen first. Luckily for these companies, they have the scratch to spend on top-notch lawyers.

Last week, a DeKalb County, Georgia resident, Aaron Hodge, filed two proposed class action lawsuits in federal court in Atlanta against daily fantasy sports (DFS) websites FanDuel and DraftKings in an attempt to recover money he lost playing games on both sites, which, he alleges, amount to little more than “illegal gambling.”

As DFS gained popularity and attention this summer and fall, in large part due to broad advertising campaigns by both FanDuel and DraftKings, users may have noticed that residents of a small number of states– including Washington, Louisiana, Arizona, and Iowa– were not allowed to play games for cash prizes.

While these early restrictions did little to slow the momentum of DFS and its two largest sites, the industry recently has come under more substantial public scrutiny following New York Attorney General Eric T. Schneiderman’s initiation of an investigation of and request for an injunction against FanDuel, DraftKings, and Yahoo!, which also hosts DFS games.

Last week’s suits by Hodge are believed to be the first legal challenges to FanDuel and DraftKings brought by a private citizen. (Hodge’s attorneys have since filed a similar lawsuit in Alabama.) Hodge’s complaints (available here and here) are basically identical. The essence of his allegations is that the DFS games offered by FanDuel and DraftKings constitute unlawful gambling under Georgia law and he therefore is entitled to restitution for his losses at both sites. Hodge does not reveal how much money he lost playing DFS, but he does allege that the aggregated losses of the proposed classes — comprised of “All persons in the State of Georgia who participated in Defendant’s DFS, deposited money in a [FanDuel/DraftKings] account, and lost money in any game or contest” —  exceed $5 million in each case.

Hodge’s complaints allege only state law claims, and the legal centerpiece of these cases is O.C.G.A. § 13-8-3, Georgia’s gambling contracts statute. That law provides that all “[g]ambling contracts are void” and that a loser may recover his or her losses from a winner under a gambling contract:

(a) Gambling contracts are void; and all evidences of debt, except negotiable instruments in the hands of holders in due course or encumbrances or liens on property, executed upon a gambling consideration, are void in the hands of any person.

(b) Money paid or property delivered upon a gambling consideration may be recovered from the winner by the loser by institution of an action for the same within six months after the loss and, after the expiration of that time, by institution of an action by any person, at any time within four years, for the joint use of himself and the educational fund of the county.

Hodge argues that DFS contests on FanDuel and DraftKings are not skill games but rather games of chance; that these sites therefore are doing little more than taking bets on sporting events; and therefore he and the sites are parties to gambling contracts for which the user entry fees constitute the gambling consideration that Hodge is entitled to recover under O.C.G.A. § 13-8-3(b).

Among his other claims, Hodge also contends that the sites violate Georgia criminal laws pertaining to commercial gambling and the advertising thereof, and he argues that the sites’ claims that their DFS contests were lawful games fraudulently induced him to participate.

An interesting allegation Hodge sprinkles throughout his complaints is that both FanDuel and DraftKings “failed to disclose the use of ‘bots’ or fake accounts designed to operate as ‘shills'”:

Upon information and belief, [FanDuel/DraftKings] uses “bots” or fake accounts to act as “shills” in the gambling scheme in order that certain winnings go to the “house” ([FanDuel/DraftKings]), and also creating the illusion to the [FanDuel/DraftKings] user of interacting with a gambler on equal footing. The employment of “shills” (or “bots”/fake accounts) employs a similar concept to those “shills” that are permitted by law in states with casinos such as Nevada, but Georgia does not permit any gambling, never mind the use of “shills” in the form of “bots” or otherwise fake accounts. And regardless, in states where such devices are employed, there is no illusion, nor effort to create the illusion, that the “house” is not winning the losing bets (in the form of monies that are attributed to “shills”) and in the case of [FanDuel/DraftKings], there is no disclosure of the use of “shills” nor any legal basis for doing so in Georgia.

One of the first procedural hurdles Hodge will need to clear to proceed with his proposed class actions in federal court are the sites’ terms of use. He wants to avoid the applicability and enforcement of these terms of use because they contain arbitration, jurisdiction, and venue provisions that would neutralize his ability to maintain these class action lawsuits against FanDuel (terms of use) and DraftKings (terms of use) in court. On one hand, Hodge is arguing that a contract — albeit a gambling contract that’s void under Georgia law — existed between him and each DFS site. On the other hand, though, he argues that the sites’ terms of use are not part of any contract or binding agreement between him and each site.

If Hodge is able to keep these lawsuits in the U.S. District Court for the Northern District of Georgia, where he has filed them, his further success will depend upon his ability to convince the court that the DFS contests FanDuel and DraftKings host really are gambling, not skill games. On this point, in addition to the well-publicized New York AG investigation and Nevada’s determination that DFS constitutes gambling, he may find some in-state assistance as well. Georgia Attorney General Sam Olens now has opened his own investigation into the legality of DFS, and the court in Hodge’s cases could find Olens’ conclusions on the matter persuasive.

Another issue possibly lurking in these cases is preemption, a legal concept based on the supremacy of federal law over state law. In general terms, preemption means that if a federal law and a state law conflict, the federal law controls. On the question of whether their sites’ contests constitute gambling, FanDuel and DraftKings may argue that their contests are permissible under the Unlawful Internet Gambling Enforcement Act (UIGEA), a federal law that prohibits certain activities and transactions connected with betting and wagering. Part of that Act provides that “[t]he term ‘bet or wager’ . . . does not include . . . participation in any fantasy or simulation sports game . . . in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization . . . and that meets the following conditions:

Meanwhile, as legal scrutiny over DFS heats up in the United States, FanDuel and DraftKings are hoping to find friendlier regulatory environs abroad. Some wonder whether their expansion into the United Kingdom may come back to haunt them stateside, however. Calling themselves “gambling software” companies, both sites have applied to U.K. regulators for gambling licenses. DraftKings received a gambling license in August, while FanDuel, which applied this month, still is waiting on a decision. DraftKings’ Chief Internal Officer says he doesn’t see a contradiction between the site’s representations in the U.S. and U.K., but American officials, including the judge or judges handling Hodge’s lawsuits, may see things differently.

(Header image via Karsten Bitter)

DraftKings, the daily fantasy site that has saturated the TV airwaves with commercials lately, has just launched their newest wing: esports. As of right now their esports division consists solely of League of Legends matches, however I wouldn’t be surprised to see Counter-Strike: Global Offensive, Dota 2 and more titles added. It should come as no surprise to see those three games be the most watched of August for Twitch.tv.

DraftKings isn’t considered gambling, but more of a skill game  — though Arizona, Iowa, Louisiana, Montana and Washington consider it online gambling and prevent their residents from playing it — and esports, the same as in in the traditional athletic world is unfortunately no stranger to gambling and match fixing. From bans in CS:GO due to match fixing last year to StarCraft banning numerous player in 2010 due to a network of match throwers, sadly once money gets involved, people tend to have their morals become a bit more flexible.

While DK may or may not be considered gambling, they are just the latest website to offer payouts based on investments. Ranging from websites such as CSGO Lounge to CSGO Loot, Gosu Gamers and plenty more, there is money to be made — or lost — by wagering your weapon or player “skins” depending on the game. They’re nothing more than digital pixels, but they carry real world monetary value, sometimes in excess of the tens of thousands of dollars.

In the Counter-Strike realm, the sponsoring of so-called gambling sites — not DraftKings, but the others — has been banned in ESEA, a top competitive league. Citing a conflict of interest, insider knowledge and general professionalism, ESEA is making a stand against gambling. Of all the leagues to take the moral high ground on an issue, it’s interesting that ESEA does it, given their shady history. Regardless of previous transgressions, it is likely for the best to see gambling sites being barred from team sponsorship.

An entirely different issue is when people under age-21 wager their skins. These items are worth lots of money, just look at some screencaps from Steam’s Community Market page. Steam is the software distribution portion of Valve, creators of CS:GO and Dota 2. Some of the items for sale on the Valve Community Market are going for $400 dollars, while other third party marketplaces are trading and betting items worth much more money than that.

While this is certainly an exciting time to be an esports fan — the prize pools have never been bigger, corporate sponsorships are flowing in and possibly a major television league and broadcast deal in the works — seeing as DraftKings sees League of Legends on par with traditional sports, we can’t get too far ahead of ourselves. We’ve already seen entire organizations get taken down for throwing matches, some for cheating and with yet another website now offering to exchange cash (not just weapon skins with value tied to them) based on esports results, the cynic in me fears the worst.

The two titans of daily fantasy sports (DFS), DraftKings and FanDuel, have new competition. Recently, Yahoo! has joined the daily fantasy goings on in addition to their traditional fantasy sports leagues. The market growth of DFS sites has taken off on a meteoric rise, and according to Forbes there was an 847 percent rise in participation from September 2013 to September 2014. As the newest option in a popular area, Yahoo!’s approach is slightly different than both DraftKings or FanDuel.

Right off the bat, the aesthetics of Yahoo! appears similar to FanDuel. From left to right, we have the Yahoo!, FanDuel and DrafKings interfaces (click to embiggen).

Beyond the layout, Yahoo! has seemingly drawn influence from both FanDuel and DraftKings for the gameplay itself. Just like in DK, Yahoo! allows users to draft up to 10 players rather than the nine of FD, the difference being two pitchers in the former and one in the latter. Despite the identical rosters to DK, Yahoo!’s player prices are much different than anything we’ve seen before.

Rather than use the $50,000 or $35,000 salary allotment of DraftKings and FanDuel respectively, Yahoo! has a $200 scaled budget. As a percentage, the prices aren’t terribly different, but I found myself having a surprisingly difficult time adjusting. Of course, the prices are different because the scoring is different as well.

With the same left to right as before, the following picture shows the scoring differences between the three sites.

Where both FanDuel and DraftKings have negative stats for batters — -0.25 points for any out on FD or -2 points for a caught stealing on DK — Yahoo! doesn’t have a way of punishing poor batting or base running performances. Pitching statistics are even more varied as wins are very heavily valued in Yahoo! at eight points compared to four points for DK and FD. Yahoo!’s only negative pitching category is giving up earned runs, same as FanDuel, to the tune of -1 point per earned run surrendered. For example, let’s say a pitcher costs 20 percent of your budget in any of the three site ($40 in Y!,$ 7,000 in FD and $10,000 in DK) . He records a win after going seven innings, gives up two runs on a pair of solo shots, plus two other hits, two walks and strikes out seven batters, his point totals for each site are:

Yahoo!: 30.6 points
FanDuel: 16 points
DraftKings: 23.35 points

Thanks to the numerous negative pitching stats in DratfKings (hits and walks in this example specifically), you get hands down the least bang for your buck with pitchers compared to FanDuel and Yahoo!. The latter in particular places a massive emphasis on wins at eight points. Such huge upside in pitches in Yahoo! with minimal downside — no negative points for any hitter outcomes and only being penalized on pitcher earned runs — makes stacking your Yahoo! lineup with the best pitchers in line for the win is hands down the best option. This isn’t a flaw, a strength or a weakness on Yahoo!’s behalf, but it is certainly something to exploit.

The biggest issue I have with Yahoo!’s current layout is the lack of weather information for each game. DraftKings at least displays weather info at the top of the screen when you enter a contest.

FanDuel leads the way with a full weather forecast for each game, including chance of rain by percentage and if the game will be played in an open stadium, retractable roof or dome.

I’d always recommend cross checking the weather for the games as in any DFS format it hurts to lose a batter to a rain out and losing a starting pitcher is like throwing money away. Adding in weather seems like something fairly easy, as Yahoo! already has an entire page dedicated to weather around the world.

Beyond the weather related issues, Yahoo! has a bigger concern when it comes to attracting players to its new daily fantasy area. During its launch, Yahoo! promised a $22,000 prize pool, guaranteed even if the contest wasn’t filled. At a $1 minimum entry for the 10,000 player league, it sounded like a good way to gather new DFS players. Unfortunately the wording tripped up many players and saw the $22,000 guaranteed prize pool would be split up if the contest wasn’t filled, and not the way Yahoo! broke it down. The way $22,000 was guaranteed was awarding $2 to the 29th-10,0000 place finishers. So, if it the contest was full, then yes, the full $22,000 would have been handed out. Unfortunately calling a prize pool $22,000 and then not delivering the full amount flies in the face of every other DFS league or entry I’ve ever entered.

For now I’ll stick with DraftKings or to a lesser extend FanDuel to fulfill my DFS cravings. I know they pay out what is advertised, I’m familiar with the scoring, and having to open one less tab for immediate weather reports makes it convenient.

I don’t play fantasy baseball. Baseball simulations are more my thing. In 1998 I started a Strat-O-Matic league which grew to a league of 24 of us that play each other online. I’m completely in on Out of the Park Baseball, trying to lead my 2017 Miami Marlins – sans Jose Fernandez, Giancarlo Stanton and Carlos Santana (acquired) following season-ending injuries – in my second season as general manager/manager after starting my career managing the Pawtucket Red Sox. For whatever reasons, fantasy baseball just never caught on with me.

Then came advertising for Draft Kings and FanDuel. Lots and lots and lots and lots of it. My curiosity grew and finally, after a year of brain washing, the mad men won. Yesterday I threw down a whopping $10 and signed up for Draft Kings to see what the big deal was. It was a fact-finding mission, mostly. But a part of me, say my right pinky toe, wanted it to become a source of income for my beer fund. After my first 25 cent game, I realized that beer fund was going to stay dry.

And now I bring the experience to you, the TechGraphs readers. Learn from me, what and what not, to do.

Grab a promo code

Before you sign up for an account, make sure you have a promo code. It’s free money. I Googled and ran with the first bigger-looking site that didn’t seem sketchy. It promised a matching bonus up to $600 for the first deposit. The one I signed up for isn’t free money, though. It’s contingent upon me earning Frequent Player Points. I earned one point for my one game, and only have 99 left points left before my bonus kicks in. Geesh. So, search around a bit, see if you can find a better deal.

PayPal?!? YES

I wanted a royalty-related username, since the site is about kings and such, and discovered that landgrave is a German title. My last name is quite German, so you can find me at LandgraveK on the site. My wallet sits in the glove compartment of my car, because I roll dangerously. Fortunately PayPal is an option to make a deposit, as are major credit cards. Otherwise I would’ve had to walk outside … where there are people … that might want to wave or talk to me.

Take a deep breath

I was anxious to find a game once they had my money. I landed in the lobby, skimmed my options, and felt completely overwhelmed. It was like walking in to a major casino for the first time. Bright, bold colors illuminated a dark background. My eyes fixated on the big ads. I gathered my over-stimulated self and decided to proceed cautiously.

Slugfest, Perfect Game, Moonshot, Gold Glove. What is going on here? Guaranteed, Qualifiers, Head-to-Head, 50/50 Leagues, Multipliers, Steps. And then I found it. My peoples. The Beginner games.

The lowest entry fee was a dollar. I’m stupid cheap and looked around for quarter games. In my search, I found some free games that may appeal to those that want to try it out and keep a buck. One I came across sported a $10 prize spread among five players, so $2 winning each.

Bam. Quarter Arcade. This is where I belong. I joined a game that maxed out at 14,100 players. The first place prize was $150, a 500 percent return. With a $3,000 prize pool, those that finished in the top 2,800 would minimally double their entry fee, or better. Optimism warmed my belly.

Prepare, prepare, prepare

Things started off well, actually. Fellow TechGraphs writer David Wiers is a Draft Kings boss and Tweeted a tip.

I love Haren in #DFS today. Only 7K on DK, 7.6k on FanDuel. Up against a scuffling Phillies side

— David Wiers (@davidwiers) April 21, 2015

Dan Haren was my first pick. And then things went totally wrong. I analyzed the pitching match ups, looking for the worst pitchers to draft a lineup against. Trevor Cahill’s a bum, so I drafted Kevin Plawecki in his major league debut and Lucas Duda. For fun I took Mike Trout, because I’m a huge homer, and Jose Bautista. A handy tool is that after each pick, it calculates the cost for average player remaining. For example, if I had five slots left to fill and $24,000 remaining (my funds started at $50,000), then I had an average of $4800 to spend on each player. I filled the rest of my roster utilizing this tool, my own instincts and figuring out best matchups. Without analytics.

Our brethren over at RotoGraphs do a fantastic job providing readers with quality research to help you select players for traditional and daily fantasy sports. Roto Riteup, which Wiers contributes to, and The Daily Grind are daily musts if you want to make educated decisions with your lineup. Or you can trust your guts and guile, like I did, and have Brett Anderson whiff in your face.

Pick your crew

Selecting players to add to your lineup is as easy as clicking a plus button. Each day’s games are listed with starting time and weather. If lineups have been officially announced, a check mark appears next to the player’s name. It’s no fun picking Buster Posey if it’s his off day. Each player’s profile features stats, updates and analysis for easy-access info.

Once you’ve set your lineup, you get the option of joining other games with that same lineup, which is handy if you’re looser with your pocket change than I am, or join other contests with a different lineup.

So how’d I do?

I was dreadful. I finished 11,527 out of those 14,100 players with a final score of 75.9. The aforementioned Anderson went negative on me against a crap Giants offense for -2.4. The Wiers pick, Haren, netted 15.3 points and was only bested by Bautista’s 16. I don’t believe he earned me any extra machismo points, however, after Tuesday night’s game.

I’d be remiss if I didn’t add that I downloaded the DraftKings iOS app, which performed as I’d hoped.

So what say you, TechGraph readers? Do you play? Are you curious? Comment below. All tips/tricks/advice are appreciated as well.