Column: Schneiderman’s ‘yahoo’ decision on DraftKings, FanDuel

11/21/2015 6:00 AM |

fantasy sports

If, like me, you watched every inning of the Mets’ recent run to the World Series, you’re probably familiar with the daily fantasy sports websites FanDuel and DraftKings.

The companies made it clear to the world this Major League Baseball postseason that they have the type of advertising budgets normally reserved for companies selling pills that might require you to consult a physician after four hours.

As someone who’s been playing fantasy sports since my teenage years, I was already familiar with DraftKings and FanDuel, the latter of which I’ve used semi-regularly in the past year. For those who don’t play fantasy sports, I’m quite certain the constant advertising push — which included TBS digitally emblazoning the DraftKings logo on the bullpen wall as they were showing pitchers warm up — has made you at least conscious of the daily fantasy sports business.

That awareness was likely heightened last week when New York State Attorney General Eric Schneiderman sent cease and desist letters to DraftKings and FanDuel demanding they stop taking money from players in New York. In his letter, Mr. Schneiderman referred to the operations as “illegal gambling.”

“Customers are clearly placing bets on events outside of their control or influence, specifically on the real-game performance of professional athletes,” he wrote in the letter.

As a result, FanDuel and DraftKings are no longer accepting deposits from players in New York State, the biggest blow yet to the suddenly embattled multi-billion-dollar daily fantasy sports industry. (For now, New Yorkers with money in their accounts can continue to play while the legal process unfolds).

With my FanDuel account balance at 83 cents heading into this weekend, I was disappointed when I thought my daily fantasy days were over. Except when I logged onto Yahoo’s fantasy site to set my lineup in one of my regular leagues, I noticed I could still play daily fantasy through them.

I found the fact that Mr. Schneiderman’s plan to block daily fantasy games in New York State only included the two biggest companies to be the most under-reported aspect of this issue.

I fiddled around for a minute to see what was so different about Yahoo’s daily contests that it could still operate as usual this weekend and found virtually no difference at all. It’s simply less well-known than the other two and built into a website that also offers traditional full-season leagues along with everything else Yahoo does.

The Associated Press attempted to answer why other daily fantasy companies — there are more than 10 overall — were not targeted in a question-and-answer post published last Wednesday.

“Has the attorney general targeted other fantasy sports operations?” it asked. “Not yet. The letters only apply to the two companies. That doesn’t mean other daily fantasy sports operators, like Yahoo and CBS, are in the clear. In his letters to FanDuel and DraftKings, Mr. Schneiderman left the door open for legal action against any companies that run and market games in a similar way.”

The other way to look at it is that Mr. Schneiderman left the door open for Yahoo — the third major player in daily fantasy — to take over the market in one of the country’s most populous states. He effectively banned the Coke and Pepsi of daily fantasy and is allowing R.C. Cola to reap the benefit here.

Of course because that third company is Yahoo, one of the largest search engines in the world and the highest-read online media source, I found this particularly curious. Few news sources even mentioned Yahoo in their coverage of Mr. Schneiderman’s letters, including Yahoo itself, which has mostly run wire stories that make no reference to other daily fantasy sports games. A Yahoo finance column published last month about recent “insider trading” between employees of FanDuel and DraftKings — where staff used analytics gleaned through their own website to help win big prizes in games on the other site — offered no disclaimer that Yahoo is also a major player in the fantasy game.

According to data in an article published on fortune.com the day after Mr. Schneiderman sent his cease-and-desist letters, Yahoo brought in more than $1.3 million in NFL entry fees for games played Oct. 11 despite only launching its daily product earlier this year. The company is a distant third to DraftKings ($25 million on Oct. 11, launched in 2012) and FanDuel ($20 million, launched in 2009), but still receiving more than double the entry fees of the fourth most popular site, FantasyDraft. And Yahoo is doing this without an outside advertising budget when its competitors are spending hundreds of millions (and even advertising on Yahoo’s websites).

When I asked my wife last week if she had heard the news that Mr. Schneiderman had sent cease-and-desist letters to FanDuel and DraftKings, she said, “Yes, much to the delight of wives everywhere,” thinking this might mean I’ll spend less time each night staring at a computer screen studying statistics.

I guess she hasn’t heard of Yahoo Sports Daily Fantasy. Apparently the attorney general hasn’t either.

TR1226_Staff_Parpan_C.jpgThe author is the executive editor of Times Review Media Group. He can be reached at [email protected].

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