BOSTON — Yahoo remains active. CBS has quietly withdrawn. And lesser known daily fantasy sports companies are scaling back.
As industry leaders FanDuel and DraftKings fight to protect their lucrative enterprises, other companies offering daily fantasy sports are taking different approaches to how they operate as their new industry faces increased scrutiny.
“The industry is pretty fragmented on the `should they stay or should they go’ issue,” says Chris Grove, editor of the Las Vegas-based Legal Sports Report, which focuses on sports wagering. “A real schism has opened up.”
Many companies are retrenching, but their movements haven’t significantly hurt the market, said David Copeland, CEO of SuperLobby, a U.K. website that tracks daily fantasy sports companies.
The maneuvering has largely depended on each company’s size and other interests. Boston’s DraftKings and New York’s FanDuel — by far the largest operators in terms of player entry fees and prize money — have gone all-in to stay put.
Yahoo, a top site for season-long fantasy sports, is among the companies that have the luxury to pick battles until the dust settles.
Like most operators, the California tech giant does not operate daily fantasy sports games in states where local law effectively bans their industry: Arizona, Iowa, Louisiana, Montana, Nevada and Washington.
But it’s also withdrawn from Florida, where a federal grand jury is looking at whether daily fantasy sports games violate state law. FanDuel, DraftKings and a number of others still operate there.
At the same time, Yahoo remains in New York, despite being issued a subpoena by state Attorney General Eric Schneiderman for more information about its daily fantasy operations. Schneiderman hasn’t ordered the company to stop operating in the state, as he’s done with DraftKings and FanDuel, which are fighting the order in court.
Yahoo declined to elaborate on its state-by-state strategy but said in a statement it believes it’s offering a “lawful product.”
CBS Sports, another big player in the traditional, season-long fantasy sports world that offers competition for cash prizes, appears to be taking a more conservative approach.
The company, which declined to comment for this story, rolled out its daily fantasy games under a revived SportsLine brand about midway through the Major League Baseball season. But the games never continued into the more lucrative NFL season, as expected.
StarsDraft is an extreme example among daily fantasy operators.
The company is owned by Amaya, operators of the popular PokerStars gambling website. It pulled out of most states just weeks after launching for the NFL season, and its contests are now only offered in Massachusetts, Kansas, New Jersey and Maryland.
Eric Hollreiser, Amaya’s vice president of communications, says the company is simply taking the long view.
“We aren’t ceding anything to competitors,” he says. “We’re running a marathon and won’t compete in the expensive marketing sprint the others are running.”
Grove suggests Amaya — one of the world’s biggest online gambling companies- has other priorities. Chiefly, bringing regulated online poker to the United States.
“They’re playing for different stakes,” he said. “There’s little reason for them to push the envelope legally in the United States, especially over daily fantasy sports, which would represent a drag on their bottom line at this stage.”
For smaller, daily fantasy sports-centered startups, it’s a somewhat different calculation.
Mondogoal, a U.K. daily fantasy sports company focused on professional soccer, has pulled out of seven states so far. Founder Shergul Arshad, a Massachusetts residents, says he’s considering pulling up stakes entirely from the U.S.
Almost 90 percent of Mondogoal’s customers, he says, are outside the U.S. anyway.
Meanwhile, at Star Fantasy Leagues, chief operating officer Seth Young says the New York-based company pulled out of 25 states recently because it concluded the risks were too great after examining local laws. Instead, the 3-year-old company has pivoted to focus on developing daily fantasy sports platforms for other operators, such as state lotteries.
“We’d rather see the clarity and re-enter,” he said. “Otherwise, we’ll focus our attention elsewhere.”
