NCAA and daily fantasy sports giants agree to suspend college sports contests
After a deluge of commercials during the NFL season, daily fantasy websites, like DraftKings and FanDuel, became household names and eventually drew the ire of lawmakers and the NCAA. States, like New York, declared daily fantasy to be illegal gambling and the NCAA believed college sports contests exploited student-athletes. Facing this mounting pressure, DraftKings and FanDuel have decided to suspend its contests for NCAA games.
DraftKings and FanDuel follow Indiana’s lead
Earlier this year, Indiana passed a bill in support of daily fantasy sports with one caveat, college and high school contests were prohibited. The exclusion of contests based on amateur games is not too surprising since Indiana is the home of the NCAA, which has long opposed college daily fantasy sports. At the heart of the NCAA’s opposition was that college daily fantasy contents centered around non-professional student-athletes.
At first glance, Indiana’s decision appeared to be bad news for daily fantasy operators; however, the Hoosier State gave DraftKings and FanDuel a blueprint to legalizing daily fantasy contests. As long as NCAA and high school contests are excluded, daily fantasy sports officially become a game of skill and not illegal gambling in the eyes of lawmakers.
In order to protect the future of the daily fantasy sports industry, DraftKings and FanDuel didn’t mind foregoing the small amount of revenue from its NCAA contests.
NCAA contests are small potatoes
College football and basketball are big business for television networks, but they are minor entries on the balance sheets of daily fantasy sports companies. College sports make up only about three percent of revenue for FanDuel and the NCAA contests net 10 to 20 times less revenue than NFL contests, according to The Verge (http://www.theverge.com/2016/3/31/11338994/draftkings-fanduel-daily-fantasy-college-sports-espn-ncaa).
By appeasing the NCAA, DraftKings and FanDuel will not hurt their business and hopefully inspire goodwill among lawmakers in states like New York.
The best path forward is without college contests
DrafKings and FanDuel’s minor concession is ultimately the best path forward for the industry. By appeasing the NCAA, the major daily fantasy operators are able to silence its loudest opposition and also go along with the precedent of Indiana’s lawmakers. The loss of college sports contests may cost DraftKings and FanDuel a few dollars now, but it will likely secure the future of daily fantasy sports.