DraftKings UK License Raises Concerns in the US

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Friday, August 28th, 2015 | Written by Lucy Brown

Over the last few months, various gaming media have been critical of Draftkings mainly due to the operator having been granted a UK license allowing them to launch their own unique daily fantasy sports services in the country. DraftKings together with FanDuel are the biggest competitors in the daily fantasy sports business, with DraftKings currently estimated to be worth an astonishing $1.2 billion, and FanDuel a little further behind with a valuation of $1 billion, according to Forbes. Nevertheless, analysts put FanDuel slightly ahead in the DFS industry, making DraftKings early entry into the lucrative UK market ahead of FanDuel a shrewd move.

Being granted a UK gaming license does present one big problem, however, as according to the UIGEA fantasy sports wagering is not really gambling, while DraftKings’ UK license has now moved the game closer to the realm of sports betting.

In Time For Soccer Season

The English premier league (EPL), is the most watched, popular, and lucrative football league in the entire world, so it’s safe to say that the Brits are partial to a game of soccer. DraftKings applied for its UK gaming license back in June 2015, a mere few weeks ago, hoping to set things in motion as quickly as possible, and in time to cash in on the 2015/16 Premier league season, which kicked off at the beginning of August. The main issues that they’re facing, however, is that things aren’t exactly clear regarding sports betting and fantasy sports. Some of the big names in the online gambling world have publicly stated that Daily Fantasy Sports (DFS) is not betting, though others disagree.

Is DFS Considered Gambling?

Lately there has been a lot of discussion regarding whether DFS is gambling or a game of skill, and the general consensus is that it is a form of gambling. The fact is that DFS services offer bonuses and rewards just like online gaming sites, which is clearly a ploy to get more people to sign up. Despite this, DFS execs emphatically deny that DFS is a form of gambling, and have done their utmost to distance themselves from the definition as they claim that if they were labeled as gambling companies, it would harm investment opportunities. Disney, for example, was in serious negotiations with DraftKings, but ultimately declined to invest in the business, in the process sending a very clear message to other large corporations and potential investors that associating your company with the DFS industry could ultimately harm your own business. This is why so many companies in the USA are concerned with DraftKings acquisition of a gaming license in the UK.

Opening A Can Of Worms

In the UK, the DFS world is much clearer and far more black and white than in the US, though there is one concern, and this is a big one. To obtain the license, DraftKings was basically forced to admit its business was in fact a form of sports betting, though they still deny that it is in the US. This could be a huge problem for the DFS industry as it could shed some light on what really goes on behind the closed doors of the DFS world. Despite this, most people, experts included, are taking a very basic approach to the whole “is DFS sports betting or not” debate and are stating that they will know it when they see it, which could mean that it’s simply down to your own interpretation.

Drawing a comparison with the famous Jacobellis v. Ohio (1964) court case which ruled on whether an Ohio cinema should be fined for showing what some people considered to be an “obscene” pornographic movie, FlushDraw reporter Hailey Hintze highlighted the difficulty in deciding what DFS was, and how the definition may vary between different countries. In the 1964 case, U.S. Supreme Court Justice Potter Stewart ruled that all obscenity with the exception of “hard-core pornography” was protected by the Constitution, stating:

“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it.”

If however, DFS grows too big and draws too much attention, more people will get involved in the debate and it could open up a huge can of worms that nobody in the DFS industry really wants to see opened.