Weighing In on the Latest Fantasy Sports #Scandal
If you're an NFL fan or have watched ESPN any time in the last few months, chances are you've heard of DraftKings and FanDuel. You literally can't watch a football game or Sports Center without seeing their commercials.
In case you're one of the few (or lucky ones) that hasn't been subjected to the commercials running on repeat, let me give you some background info.Both sites are daily fantasy sports providers. You sign up, pay up and enter daily and weekly fantasy sports contests for everything ranging from the NFL, MLB and PGA to NASCAR and MMA. In turn, you can win real money. And, as they advertise, a lot of it. Watch here or here.
Everything has seemingly gone exceedingly well for the two sites in recent years - revenue was stacking up and investor backings and major partnerships were rolling in. But, when a DraftKings employee inadvertently released data online before the third week of NFL games and won $350,000 on competitor site, DraftKings, in the same week, it was abundantly clear that a storm has been brewing.Social media unleashed a fury and lawmakers who were already critical of the online fantasy sports world were eager to liken his slip up to insider trading (you can read more about that in this WSJ article), calling on the FTC to open an investigation. The U.S. Justice Department and the Federal Bureau of Investigation are even investigating if the daily fantasy sports business model is legal.
Since the fall out a few weeks ago, both companies have taken steps to repair their respective images while fighting for the industry that they currently operate in. Like most PR pros, I love a good scandal, so in an effort to understand what went wrong, I've done some digging. Here are my initial thoughts and questions.
Where was the plan? The legal grey area the sites are currently operating in has been controversial for quite some time. On top of that, FanDuel and DraftKings have recently aimed to draw serious attention to themselves by running non-stop advertising.So why didn't they anticipate the inevitable questions like, "is this really legal?" And, if they did, why wasn't there a plan in place to get out in front of those questions?
It seems pretty clear, to me, that they weren't prepared for this scenario at all. In fact, DraftKings CEO Jason Robins has reportedly used messaging (e.g., comparing the site to a casino) that is in stark contrast to the very idea that his site isn't illegal because it's a game of skill, rather than chance like online poker.
Messaging in general seems to be a problem considering Robins also stated people must simply just be "jealous" if they take issue with fantasy's legal status, but that's an entirely different post in itself.
Why were employees allowed to play on competitor sites in the first place? DraftKings and FanDuel employees are strictly prohibited from playing on their respective employer's sites. However, both companies have openly admitted it's common practice for employees to play using a competitor's service.
What's interesting here is that the sites function similarly. So similarly that NFL players, for example, often go for the same price point each week on both sites. If the data employees are privy to could give them an advantage at their own company, why wouldn't it help them get ahead on a site that is essentially identical?
More importantly, how did DraftKings and FanDuel not see the potential issues that could stem from this "common" practice? I'm still scratching my head on this one.
Why issue a joint statement, but then have completely misaligned strategies? In response to the news, the two companies issued a joint statement to defend their internal policies and the integrity of the industry.
A super surprising move, in my opinion. It seems to me that comments about the integrity of industry overall would have had more weight coming from a third party organizations, but the Fantasy Sports Trade Association (FSTA) was oddly quiet in the first few hours.
But, it's what has happened after the statement that doesn't make much sense.
FanDuel has actively been encouraging players, and the general public, to sign a petition urging lawmakers to allow the fantasy sports industry to continue operating as is. It's prominently featured on its social channels, through the hashtag #fantasyforall.DraftKings doesn't seem to have the same agenda though. A review of its recent social media updates doesn't turn up any calls to action to sign the petition and it's not easily found on the company's website. The strategies don't appear to be in sync, so why issue a joint statement and present a unified front if there's no plan to carry out a long-term collaborative effort?
I certainly don't have all the answers for these challenges and, of course, I have had some time to think about the missteps both companies have made - hindsight is always 20/20. Is there anything that I missed or that you would've done differently?
To DraftKings and FanDuel's credit, the constant advertising hasn't stopped and both sites pulled in record-setting weekends immediately following the scandal, so they must be doing something right.
Either way, I think it will be interesting to see how this plays out for the industry and both companies. Pull up a seat and grab some popcorn because this one is just getting started.
