NFL broadcasters air football for glory and for supremacy, but they also do it for the giant check, and lately, those giant checks have been coming from daily fantasy companies DraftKings and FanDuel. As Sports Business Journal‘s John Ourand and Terry Lefton wrote this week, “DraftKings and FanDuel have created the fastest-growing ad sales category in sports TV by far and one that has added more than $200 million in ad sales revenue for the NFL’s network partners: CBS, ESPN, Fox, NBC and NFL Network.” DraftKings in particular outspent all other companies on TV advertising ($23 million) for the week ending Sept. 9, and they’ve maintained that top status with an estimated $16.4 million spent over the last seven days (according to ispot.tv’s daily-updating past-seven-days tracker) and 5,149 national airings, while FanDuel is now in the top 10 too, clocking in at #7 with an estimated spend of $10.9 million on TV and 2,653 national airings. These sites have been around for a while (FanDuel since 2007, DraftKings since 2012), but their recent massive amounts of funding have enabled them to advertise at a whole new level this year. All those ads have annoyed viewers, though, and they’ve bugged one particularly influential viewer. That would be New Jersey congressman Frank Pallone Jr., who’s now calling for a congressional hearing into the legality of daily fantasy:
Pallone, a strong advocate for legalized and regulated professional sports betting and the billions in profits it would bring to New Jersey, highlighted the legality of fantasy sports and the need to examine how participation in fantasy sports differs from gambling, as well as the relationship between professional leagues, teams, and players and the fantasy leagues. The official request was sent to full Committee Chairman Fred Upton (R-MI) and Commerce, Manufacturing, and Trade Subcommittee Chairman Michael C. Burgess (R-TX).
“Anyone who watched a game this weekend was inundated by commercials for fantasy sports websites, and it’s only the first week of the NFL season,” said Congressman Pallone. “These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result. Despite how mainstream these sites have become, the legal landscape governing these activities remains murky and should be reviewed.”
The Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibits sports betting nationally, except in states that legalized sports betting prior to passage of PASPA. Online sports betting and online gambling are also prohibited under Federal law. However, the Unlawful Internet Gambling Enforcement Act (UIGEA) specifically exempts fantasy sports games that meet certain criteria thanks to a loophole that has become known as the fantasy sports “carve out.” This loophole has blurred the lines between betting conducted through fantasy sports sites and online gambling.
“Fans are currently allowed to risk money on the performance of an individual player. How is that different than wagering money on the outcome of a game?” noted Pallone.
It’s going to be interesting to see if Pallone’s request gets anywhere. There definitely do seem to be some crossovers between the daily fantasy realm and the gambling realm, and it’s not necessarily logical that daily fantasy is allowed while betting on games itself is largely prohibited, but DraftKings and FanDuel have a lot of powerful people and businesses on their side. DraftKings’ recent $300 million round of funding was led by Fox Sports and included investments from MLB, the NHL, MLS, MSG and the Dodgers, and they have a $250 million deal to be ESPN’s exclusive daily fantasy advertisers starting next year. They’ve also agreed to spend $250 million on advertising on Fox networks over the next three years. Meanwhile, FanDuel raised $275 million last month, some of which came from NBC parent Comcast, from Turner, and from Time Warner. There are other daily fantasy sites out there too, including Yahoo and Fantasy Aces, and there’s extra advertising revenue from them.
There have been a ton of prominent companies investing in these sites, and the sites have provided a lot of extra revenue to leagues and broadcasters, especially this year. A network source told SBJ DraftKings and FanDuel alone have likely spent about a combined $500 million on TV advertising this year so far. By comparison, DraftKings spent just $20.9 million on TV ads for all of 2014 and $7.5 million for all of 2013. Even if Congress does start looking into them, it seems they’ll have a lot of big names in their corner. Thus, despite 76 per cent of FanDuel and 75 per cent of DraftKings commercials tracking negatively, the barrage of daily fantasy ads may not leave us any time soon.