The uncertain future of fantasy sports – CNBC

Two main things are abuzz at the conference. First, is there really going to be a merger between DraftKings and FanDuel? And second, will New York state politicians legalize daily fantasy sports before their session ends on Thursday.

“It’s a turbulent time for the industry,” Paul Charchian, the association’s president, told the 300-plus members in attendance.

After mammoth growth in 2015, fantasy participation stabilized in 2016.

While fantasy sports participation in North America has reached more than 57.4 million players according to an Ipsos poll — the legal and regulatory battles have put financial strain on the companies, forcing them to re-allocate their staffs and resources.

“The lawyers are definitely making a lot of money,” said Peter Schoenke, the association’s chairman. “There’s a lot of legal chaos right now.”

Insiders at the conference suggested the renewed merger talks between daily fantasy’s two biggest players might be a backup plan in case New York state lawmakers rule against the companies.

Consolidation could help both companies financially and potentially ease their legal and regulatory fight with the states.

Specifically in New York state, Schoenke has been personally very active. “We have hired lobbyists, PR, and I have been trying to coordinate with our members to get us all on the same page so we can all push for the same things. We need legal clarity.”

“I would say my biggest competition right now is lawmakers,” said Stacie Stern, general manager of Head2Head Sports, an Arizona-based fantasy sports site. She said the fight against daily fantasy sports has hurt her part of the industry: season-long fantasy sports. “It’s created a bit of a headache in terms of educating lawmakers about what fantasy sports games are and why they aren’t gambling.”

While a lot of the news goes to the giant players like DraftKings and FanDuel, ESPN, Yahoo, and CBS, a lot of the operators are small businesses, like Head2Head.

“So far, Colorado has been the best state,” Stern said about her travels across the country to get regulators to open up. “Lawmakers were very reasonable, took a measured approach to consumer protection but also letting the small businesses keep running and not hindering.”