The BLOG: Culture

DraftKings, gambling, and the future of successful startups

As daily fantasy sports companies come off of a crushing legal blow in the state of New York  — one of their biggest markets — people concerned with the viability of this new iteration of gambling, or not gambling depending on who you ask, are concerned about the future of the business. Startup companies such as Boston-based DraftKings and FanDuel have operated largely unrestrained and reaped the benefits that come with creating something new.

We’ve seen similar reactions with ride sharing services like Uber; startups pushing boundaries, generating a lot of profit, and growing exponentially, but drawing suspicion as these companies operate in ways that some deem questionable. These startups push boundaries in ways that are technically legal but rock the boat enough to lead to disputes such as the ones between cab drivers and Uber, and traditional gambling outlets against these newer versions of gambling.

This trend of startups operating outside of conventional guidelines signals a larger issue that is likely to continue to rear its head given the excitement and, frankly, money that is attached to these new enterprises. With startup culture looking as if it won’t be slowing down anytime soon, how do established and/or legal institutions keep up with the ever-changing landscape that is being molded by the Ubers and DraftKings of the world? Is there a way to predict which startups will grow large enough to garner legal attention on the local and state level? Do municipalities develop committees on a case-by-case or a long-standing basis to deal with these issues?

It comes off as a serious conundrum because plenty of cities and states are allocating resources and making spaces available for startup hubs and silos to develop within their borders, encouraging the people who occupy these places to think as outside of the box as best as they possibly can. Yet, at the same time, these governments are imposing regulations on those that grow to be the biggest, in what seems to be efforts to tame the larger-than-life companies that grow by the day.

While there is some weight to the argument that there are no rules and therefore these companies should seek to operate as they so choose, so long as they aren’t violating any rules, it does seem to be a sneaky way to go about things. DraftKings receiving a license for “Gambling Software” and “Pool Betting” in the United Kingdom, while asking to be seen as a game of skill and not one of gambling activity in United States, seems to be indicative of the somewhat shady practices that have raised suspicion in the first place.

The prospects for the continued operation of daily fantasy sports don’t seem to be bright, with DraftKings and FanDuel both appealing the decision by New York state calling for the startups to cease operations within their borders. And with a case in Florida heating up that would call for a “reevaluation of their relationships,” it seems the legal troubles will continue and the future of daily fantasy sports is dim for the first time.

Daily fantasy sports (DFS) are gambling, and I don’t think DFS companies have much to stand on in court. And, I wouldn’t bank on their appeals being looked upon favorably. That being said, I don’t think the death of daily fantasy sports, or at least as we know them, should be seen as a failure. Change is coming, but we haven’t seen the end of daily fantasy sports in their entirety. This era of fantasy sports gambling, which has gone on since about 2012, should be seen as an anomaly for being able to take place for as long as it did. Moving forward, companies like DraftKings and other startups that wish to follow in their footsteps, have the opportunity to pursue the same ends in a new fashion. I’ve never taken part in daily fantasy sports, but there’s no doubt about the impact they have had on professional sports, and by any metric, they are far from failures.

Carl Brooks Jr.

Carl Brooks Jr.

Carl Brooks Jr. is a freelance writer and blogger. He grew up in the Boston area and is passionate about sports, pop culture, and how race, class, and gender impact the two. He is finishing up his Sociology degree at Gordon College. He can be reached at [email protected], on Twitter at @carlbrooksjr, and at carlbrooksjr.net.

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