FanDuel’s Long Term Future in Doubt

Deloitte expresses doubts over FanDuel’s future.

FanDuel, one of the world’s leading daily fantasy sports operators, appears to be going through a very rough patch as a number of US states have found the website to offer illegal gambling.

Together with rivals DraftKings, the DFS operator had been on a major uptrend over the last few years and they posted record revenue of $87.7 million between 1 January 2014 and 30 June 2015.

At the same time, their operating losses increased from $11.3m to whopping $94.9m, which was attributed to the company’s investment in marketing and product development.

And while FanDuel’s financial reserves decreased from $274 million to mere $47.8 million, the company believes the heavy investment will soon start producing results as such a move has helped them increase their active paid player base fivefold to 1.25 million.

FanDuel Faces Legal Battle in New York

However, it is the numerous legal battles that are placing a burden on their shoulders at the moment, with New York attorney general Eric Schneiderman ordering both FanDuel and DraftKings to exit the state.

Idaho and Alabama have also banned DFS operators from their premises in recent weeks, piling more misery on FanDuel and their efforts to reverse the negative trend.

The company’s annual report claim that their revenue earned in markets they were recently forced to leave accounted for less than 20% of the total turnover, but their auditors Deloitte have expressed serious doubts with regards to the future of the company if the latest trend continues.

There is still a chance for FanDuel to return to the state of New York as the new DFS legislation is expected to be introduced in the coming weeks, according to state Assemblyman J. Gary Pretlow.

NBA Bans DFS Operators from Advertising on Team Jerseys

In similar news, NBA Commissioner Adam Silver and his board of directors recently decided to place daily fantasy sports operators on the blacklist when it comes to advertising on team’s match day jerseys, thus delivering another blow to the likes of FanDuel and DraftKings. ‘

The decision came as a surprise considering that the two companies already have sponsorship deals in place with quite a few NBA teams, and they have now been placed in the same bracket with businesses having to do with tobacco, alcohol, gambling, politics, media and Nike competitors.