As part of a massive advertising blitz that eventually drew regulators' attention, daily fantasy sports operators spent money on signs, lounges and Jumbotron ads in major league arenas. Now facing legal challenges in several states, at least one of the biggest daily fantasy sites is asking its major league partners to let it pull back.
DraftKings has asked some of its National Basketball Association partners to defer about 10% of its committed payments, according to people familiar with the deal. It has also asked that its signs and banners in arenas show up on TV less often, according to one of the people.
That suggests that the company is trying to lower its profile at a time when it is facing an increasingly hostile political environment. DraftKings and FanDuel have also been spending less on TV advertisements, although the companies say that it was always their plan to reduce marketing spending at this point in the NFL season.
"We have good relations and are in good standing with all of our partner teams. We are always in dialogue with them, including now," DraftKings said in a statement. FanDuel declined to comment on whether it too was seeking flexibility from any of its advertising partners.
It is also possible that DraftKings is trying to conserve cash in what might prove a long and costly legal battle. The company said it has hired Boies, Schiller & Flexner to represent it, after Attorney General Eric Schneiderman declared that daily fantasy sports are gambling, and therefore illegal in the state. Schneiderman also ordered DraftKings and FanDuel specifically to stop accepting payments from New Yorkers, but neither company said it would comply.
On Wednesday, a California assemblyman asked the state's attorney general to take similar action. In Boston, where DraftKings has its headquarters, Massachusetts Attorney General Maura Healey told reporters she considered daily fantasy sports to be a form of gambling, although she stopped short of saying she considered it illegal.
The companies, which are the two biggest daily fantasy sports sites by a wide margin, are fighting Mr. Schneiderman's order with a legal challenge, and with social action, including an e-mail campaign, a Twitter hashtag and a rally Friday morning in New York.
The shutdown order "would deprive hundreds of thousands of subscribing New Yorkers of the opportunity to pit their skills against the skills of others in selecting a 'fantasy' team of athletes from different sports teams and competing in contests offering prizes to the players whose fantasy teams perform best," FanDuel said in a complaint on Friday. The companies are seeking an expedited ruling that their contests don't constitute gambling or bookmaking under New York law.
-- Bloomberg News