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Posted on: August 10, 2023, 02:44h.
Final up to date on: August 10, 2023, 03:08h.
Underdog Sports activities, a supplier of paid fantasy sports activities contests, claims DraftKings (NASDAQ: DKNG) and FanDuel are waging “again room” campaigns aimed toward sustaining their duopoly and stifling innovation within the day by day fantasy sports activities (DFS) area.
Of their early days, DraftKings and FanDuel pioneered the idea of DFS, a departure from the normal season-long codecs that for years had been the bedrock of the fantasy sports activities world. The idea was warmly obtained amongst sports activities followers, significantly as a result of money prizes had been concerned although DFS wasn’t initially considered as betting.
Following the 2018 Supreme Court docket ruling on the Skilled and Newbie Sports activities Safety Act (PASPA), DraftKings and FanDuel leveraged their DFS success by changing substantial parts of their shopper bases into sports activities bettors. As we speak, the 2 operators mix to regulate about 75% of the US on-line sportsbook market, confirming that the DFS-to-betting template is efficient.
Based in 2020 by Jeremy Levine, privately held, New York-based Underdog Fantasy believes DraftKings and FanDuel are afraid of the competitors introduced by upstart DFS suppliers, and that the 2 behemoths are utilizing political sway to tarnish smaller rivals.
Underdog, Others Pose DFS Threats to Established Rivals
Whereas DraftKings and FanDuel efficiently established DFS dominance and parlayed that right into a sports activities betting duopoly, the opposite aspect of the story is that their DFS companies endured some attrition as a result of smaller gamers bought uninterested in dropping to “sharps” with high-end pc applications that made DFS right into a profession.
That participant dissatisfaction opened the door for Underdog and different firms to innovate and market DFS choices which can be extra interesting to sports activities followers who aren’t spending 10 hours a day utilizing know-how to construct lineups. Underdog claims its fantasy sports activities share now exceeds that of DraftKings and FanDuel, underscoring why these companies worry the brand new competitors.
Underdog and different firms innovating in fantasy sports activities and sports activities betting threaten their monopoly,” wrote Levine in a letter to Underdog purchasers. “They’ve seen our firm, and others, produce superior merchandise, extra thrilling person experiences, and start to problem them for sports activities followers’ consideration — and so they’re scared that we’ll problem their market positions. We’re already larger than they’re in fantasy. Frankly, they need to be scared.”
Levine provides that DraftKings and FanDuel can’t inform regulators that they don’t like competitors, so the operators are leveraging “a disingenuous narrative” that Underdog contests are unlawful as a result of they’re akin to sports activities betting.
That’s related as a result of Underdog and a few of its comparable opponents function in states which can be coveted by the sports activities betting trade. At present, Underdog provides its fantasy video games in 41 states and its fantasy decide ‘em video games in 39 states. As just some examples, Underdog is operational in California, Florida, Georgia, and Texas, none of which have aggressive sports activities wagering markets. Florida is the one member of the quartet to allow that exercise and there, it’s managed by the Seminole Tribe.
Underdog Says Regulation is on Its Aspect
Levine acknowledged within the letter that the state-level legal guidelines, which he believes had been basically written by DraftKings and FanDuel lobbyists, clarify that fantasy sports activities are a lot broader than the wage cap methodology utilized by the 2 giants.
“Equally vital, in practically each state the place a sports activities betting legislation has been handed, the legislation makes crystal clear that fantasy sports activities will not be sports activities betting. Explicitly, these legal guidelines state that if a contest is fantasy sports activities, it’s subsequently not sports activities betting,” he famous.
Apparently, whereas employed at StarSteet in 2012, Levine designed the trade’s first-ever single-player fantasy recreation. It was later offered to DraftKings.
Maybe additional rankling DraftKings and FanDuel is the purpose that in a number of the fastest-growing sports activities betting states, courts have constantly held that Underdog’s choices match the invoice as authorized fantasy sports activities choices.
Regulators throughout the nation – together with in states the place cell sports activities betting can also be authorized – have concluded our video games completely match throughout the authorized definition of fantasy sports activities. This consists of determinations in Arizona, Colorado, and Indiana, the place the identical regulators oversee each fantasy and betting, that our merchandise are fantasy contests,” concluded Levine.
13 months in the past, Underdog raised $35 million in a Sequence B spherical of financing, valuing the corporate at $485 million. Buyers embrace Mark Cuban, Kevin Durant, Trae Younger, Odell Beckham Jr., Breon Corcoran (ex-CEO Paddy Energy Betfair/Flutter), Mitch Garber, Eilers & Krejcik, Liontree Companions, Kevin Carter, Mark Pincus (founding father of Zynga), SV Angel, The Chainsmokers, Kygo, Steve Aoki, Nas, Future, Acies Funding and BlackRock.
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