American DFS Industry Suffers Major Blows

ESPN announced last week that its exclusive advertising deal with daily fantasy sports operator DraftKings has come to an end. The companies agreed to the deal, which saw DraftKings become ESPN's official DFS operator, in June 2015. Things have not being going well for DFS market leaders, which also includes FanDuel. The legal situation involving New York Attorney General Eric Schneiderman is currently being investigated by the FBI as the operators seek to open up the market within the state. The states of Hawaii, Illinois, Mississippi, Texas and Vermont also restrict DFS betting as Attorney Generals determined that it violates state laws. Another massive blow to the industry was payment processor Vantiv's decision to block DFS transactions and just last week Citigroup advised that it would blocking debit and credit card transactions initiated in New York for wagers on DraftKings and FanDuel. All is not lost as there are quite a few states attempting to keep the industry alive by modifying legislation to permit DSF betting. In July of last year Fox reportedly took an 11 percent stake in DraftKings for an estimated $160 million in cash but in a filing with the Securities and Exchange Commission, Fox stated, "based on information concerning DraftKings valuation in a recent funding transaction, (Fox) determined that a portion of its investment in DraftKings was impaired and recorded a loss of approximately $95 million." While DrafKings has moved into other markets like the UK, the industry in the US has suffered some major blows.