DraftKings is distancing itself from gambling and poker, the daily fantasy sports (DFS) platform requesting that the World Series of Poker (WSOP) terminate its sponsorship agreement effective immediately.
The last two WSOP events have been flooded with DraftKings commercials and branding materials, but the DFS network’s presence won’t be felt when the November Nine commences on November 8.
Nevada issued cease and desist orders to daily fantasy platforms in mid-October after concluding that the contests constitute gambling.
That decision ultimately meant that DraftKings and rival FanDuel were in violation of current Nevada interactive gaming law that mandates companies obtain gaming licenses before providing services to its residents.
“In light of last week’s news in Nevada, DraftKings asked us to cease any sponsorship activities … and we complied,” WSOP’s Seth Palansky told PocketFives.
October has been a rough month for daily fantasy companies. DraftKings and FanDuel have been subjected to much media scrutiny, and the FBI, Department of Justice, and Black Friday architect Preet Bharara have launched investigations into daily fantasy sports.
Amaya’s DFS platform StarsDraft has terminated operations in all but four states to “actively monitor developments.”
The storm of public embarrassment will continue into November.
It all boils down to whether DFS contests are legal and whether the currently unregulated platforms have the proper safeguards in place to prevent fraudulent activities by those privy to the private data and statistics.
The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) blocked online betting on the federal level but failed to outlaw daily fantasy contests. At the time, fantasy sports were largely confined to yearlong leagues played amongst friends.
The emergence of daily contests and the games being labeled “skill-based” have carved a nice loophole out of UIGEA.
But after a DraftKings employee topped nearly 230,000 entries to place second and win $350,000 on FanDuel, investigators began looking into operational procedures to determine if DFS employees could unfairly gain an advantage over public competitors.
DraftKings and the World Series of Poker are going their separate ways, as is poker and daily fantasy as a whole. DFS operators believe their contests are games of skill, while poker advocates argue largely the same.
Unlike the vast majority of gambling formats, the house doesn’t have an active role in DFS contests or poker but simply act as facilitators. Daily fantasy competitors pay entry fees, poker players pay rakes.
“Our concept is a mashup between poker and fantasy sports,” DraftKings CEO Jason Robins said in 2012. His tune has drastically changed, his company now stressing that it offers skill-based single-day online games for cash and prizes.
Poker’s overall reputation is that it falls into the category of gambling, the labeling largely defined by those who have never sat down at the felt.
“A daily fantasy pro’s competitive edge over a beginner is nothing compared to the edge of a poker pro versus a first-time poker player,” poker pro Andy Frankenberger told CNBC this month.
Frankenberger argues DFS dictating roster prices for players based on their prior performances is similar to a Vegas bookmaker setting odds and lines for games.
“It’s a joke that between online poker and daily fantasy, poker is the one that’s widely prohibited,” Frankenberger concluded.