By Ira Boudway and Joshua Brustein
When DraftKings and FanDuel announced last month that they planned to merge, it spelled the end of a costly war for market share in the daily fantasy sports industry. FanDuel, founded in 2009, and DraftKings, which came on the scene three years later, had spent hundreds of millions of dollars on advertising and ended in a virtual tie.
A major factor motivating them to team up came from the common threat of a crackdown by regulators seeking to brand their games as gambling. DraftKings and FanDuel have so far survived that challenge, but it’s left them in no shape to keep battling each other. (According to Legal Sports Report, there are 10 states in which DraftKings does not offer games and 11 in which FanDuel doesn’t, due to legal concerns.)
Before they can join forces, however, the companies will have to get past a new regulatory problem: After a merger, the combined company would control 90 percent of the daily fantasy market, a level of market power that could raise eyebrows at the Federal Trade Commission.
In the coming days, the companies are expected officially to notify the FTC and the Department of Justice of their plans to merge. The FTC, which will take the lead in the review process, can decide either to reject or approve the deal, possibly with conditions.
An agency spokesperson declined to comment, as did DraftKings and FanDuel. But while their conversations are being conducted behind closed doors, people who follow fantasy sports say the companies will avoid the strongest argument they could make–that a major competitor is the sports betting market.
The standard playbook for merging companies is to make expansive claims about how many companies are their competitors. “You can point to legal and illegal sports betting–for which daily fantasy sports is a substitute–or non-daily fantasy sports,” said Thomas Brown, a partner at the law firm Paul Hastings who focuses on antitrust law.
Indeed, the untold hundreds of billions Americans spend every year on legal and illegal wagers dwarf the $290 million in revenue the daily fantasy industry made last year, according to a report from research firm Eilers & Krejcik Gaming. And there is some precedent for merging companies to point to black or grey markets as competition: When record labels Universal Music Group and EMI merged in 2012, for instance, they argued digital piracy limited their pricing power.
Unfortunately, DraftKings and FanDuel just spent tens of millions of dollars in lobbying and legal fees to label themselves games of skill and not sports betting. “DraftKings and FanDuel are not going to define themselves as an online gambling company, because they don’t like that word,” said Jeff Ifrah, an attorney who has represented companies in the fantasy sports industry.
Instead, DraftKings and FanDuel are expected to be eager to say they’re up against traditional fantasy sports leagues, which are run by behemoths such as ESPN and Yahoo.
Yet there’s not much evidence customers see the market this way. Of the 57.4 million people who play fantasy sports, just 17 percent play in both traditional and daily contests, down from 21 percent in 2015, according to a 2016 survey conducted by Ipsos on behalf of the Fantasy Sports Trade Association. (The FSTA says the data suggests most players don’t have time for both, so they choose one or the other.)
David Kaplen, a 42-year-old living in San Antonio who spends tens of thousands of dollars per week on daily fantasy entry fees, says traditional leagues are no substitute. “It’s more of a casual thing,” he says of the traditional season-long contests.
Yahoo, whose traditional-league offerings count tens of millions of users, began offering daily fantasy games in July of 2015 with the premise that it could convert traditional fantasy players into daily players. But it has captured a small slice of the daily fantasy market. According to an analysis by Legal Sports Report, Yahoo’s revenue from Week 12 of the NFL was only about 1 percent of what DraftKings and FanDuel together made in the same period.
The key question for regulators may be whether the combined company would be able to raise prices more than either DraftKings or FanDuel could on its own. In a statement on the proposed merger, the companies say they intend to keep fees and structure competitive “in order to offer consumers a compelling experience.”
The truest measure of pricing in daily fantasy sports is the rake, or the percentage of entry fees paid by players that the operators keep from each contest. For players, there a handful of factors that go into measuring value for money: the rake, the quality of completion, the number of winners per contest, the size of the prizes, and so on. So even if the companies raised the rake, winning players might not see the service as more expensive if there were more players and bigger prize pools. Or rakes could stay flat, but competition could get stiffer.
In the end, the measure is how much money a player wins or loses. “I would never stop playing altogether,” says Kaplen. “If it felt like I was beating my head against a wall and I wasn’t profitable any more, I would drastically cut down my play to where it would just be a hobby.”
This attitude could benefit DraftKings and FanDuel in their argument to antitrust regulators. Daily fantasy, after all, didn’t exist a decade ago, and there’s no reason it must a decade from now. The FTC could decide sports betting is a competitor, whether or not the companies make that case, or it may simply decide the young industry is too fragile and small to survive more interference from regulators.
Up and Coming Sports Stars to Look Out for in 2020
Every year, a raft of exciting new players come onto the scene across all of the major US sports. With the MLS season getting underway and the NFL and MLB drafts not too far away, now is a great time to look at the young sports stars that could have a very bright future ahead of them, and the ones that are already proving they are destined for greatness.
Theo Bair (MLS)
This MLS season is looking like it could be one of the best yet, with David Beckham’s Inter Miami team adding some extra dazzle to the league. Whilst Beckham might be able to attract a lot of new players to his MLS team, there are a lot of young stars on their way through such as Theo Bair at Vancouver Whitecaps. Bair has already made an impact on the first team and after impressing at under-20 and under-23 level for the national team, he has made two appearances for the senior team, well before his 21st birthday. This year could see Bair make a real name for himself in the MLS.
Vladimir Guerrero Jr. (MLB)
Montreal-born Vladimir Guerrero Jr has one MLB season under his belt but it looks like the best is still yet to come from him at the Blue Jays. He was heavily backed to take the league by storm but he failed to live up to the hype that surrounded him. Without the pressure of being the top-ranked prospect, this season could see Guerrero play with some weight lifted off his shoulders. He has been working very hard on his fitness over the offseason, something that his manager Montoyo has been quick to comment upon.
Connor McDavid (NHL)
McDavid has already established him as a top hockey player but at 23, he has the potential to go on to do so much more. The player was born in Ontario and was the first overall draft pick, showing how much expectation was already on him at that stage but he has gone on to prove that he is one of the best players in the NHL. McDavid could go on to be one the NHL’s best-ever hockey players and this season could be the year that he shows the world, not just the NHL.
Chuba Hubbard (College Football)
The Oklahoma State Cowboys running back has been making the headlines for several years now. He continues to improve and grab more attention for his impressive stats and performances. He was close to being a sprinter and nearly made the Canadian Olympic team before switching over to football. He is passing up the 2020 NFL draft to play his senior season at Cowboys. He should give them a good chance of winning the College Football Championship, though they’re trailing at the seventh spot in the latest American football odds at +2400.00, with Clemson as the current betting favorites.
2020 will definitely be a very exciting time with some of these young stars looking to breakthrough in their respective sports and show the world what they are capable of.
Bob Baffert is back at the Kentucky Derby – and looking to break the Curse of Apollo
Bob Baffert is back at the Kentucky Derby with early favourite Justify after watching the race from his sofa in Southern California last year.
The Hall of Fame trainer’s ability to produce Derby contenders year after year is an enviable feat and why his absence a year ago stood out. It was just his second since 2009 and occurred because his lone candidate got hurt.
Baffert will saddle Justify and 30-to-1 shot Solomini in Saturday’s Derby.
Justify is one of the greenest colts Baffert has brought to Churchill Downs. He’s won all three of his starts by a combined 19 lengths. If Justify wins, he’d be the first to do so since Apollo in 1882 without racing as a two-year-old.
“The thing about the Kentucky Derby, you have to have the right horse. It just happens. You can’t force it,” Baffert said. “All of a sudden, you have good horses and you’re there. So I’ve been really fortunate to have some really good horses.”
Baffert’s four victories are tied for second-most in Derby history. He’s finished second three times, too, including in 2012 with Bodemeister, also the last time he had two starters in the same year.
Like Justify, Bodemeister didn’t race as a two-year-old. He set a blistering pace and led the Derby until the final 150 yards when I’ll Have Another overtook him to win by 1 1/2 lengths.
Magnum Moon, the 6-to-1 third choice, also is unbeaten and didn’t run as a two-year-old.
“It’s going to happen,” Baffert said, referring to the curse being broken. “Whether it happens this year or whatever, but it will happen because Bodemeister almost got away with it. But I don’t really worry about that.”
Baffert almost had a third starter this year until McKinzie developed a hind-end issue that knocked him off the Derby trail.
“When McKinzie got hurt, I wanted to throw up,” he said. “I really think McKinzie would probably be second choice here. We’d really have a 1-2 here.”
Justify cleared the biggest pre-Derby hurdle by drawing the No. 7 post. Jockey Mike Smith can use the colt’s early speed to position him well for the long run to the chaotic first turn. Solomini ended up in the No. 17 post; no horse has ever won from there.
Baffert turned 65 in January, making him eligible for Medicare and retirement at most other jobs. However, he entertains no such thoughts.
“I work hard at it. I just don’t give up,” the white-haired trainer said. “I’m constantly meeting people. They’re sending me horses. If you don’t have success, you’re not going to get those opportunities.”
After a successful run in the quarter horse ranks, Baffert switched to thoroughbreds. He started with one horse.
“After 25 years, I’m finally getting horses that I don’t have to buy,” he said. “The big guys are sending me horses.”
None was bigger than American Pharoah in 2015. The colt swept the Derby, Preakness and Belmont to become racing’s first Triple Crown winner in 37 years.
Baffert has compared Justify to American Pharoah, citing the colt’s imposing physical presence and big stride. Still, Justify has yet to encounter the kind of traffic the Derby’s 20-horse stampede creates and the talent as he’ll run against on Saturday.
“I’d rather have a really talented horse than one who’s seasoned and just on par with the rest of them,” Baffert said.
Early on, Baffert knew Justify had the goods.
“The first time I worked him at Santa Anita, I knew he was a really good horse,” he said. “The track was really deep that morning, and he went around there effortlessly. His first race, he ran incredibly and showed how special he was.”
That kind of intuition is what separates Baffert from his rivals, fellow Hall of Famer trainer D. Wayne Lukas said.
“Bob’s got a great feel for it,” he said.
Matthews ready to return to Maple Leafs lineup after missing a month
NASHVILLE — The hurtin’ tune that Auston Matthews has been singing for the past four weeks finally can be put in the remainder bin in Music City.
The Maple Leafs’ top centre on Wednesday declared himself set to return to the lineup after recovering from a right shoulder injury.
Wonderful timing, of course, considering the Leafs will take on the No. 1 club in the National Hockey League, the Nashville Predators, on Thursday night.
“In my mind, I think I’m ready to go and taking it as I’m getting ready to play (Thursday),” Matthews said after resuming his normal role, between William Nylander and Zach Hyman, during practice at Bridgestone Arena.
“It felt good, nice to get in all the reps and everything. (Wednesday) was a good step forward in that process, going through the line rushes.”
It seemed probable that the Leafs also will have defenceman Nikita Zaitsev, who missed the past five games as he recovered from an illness, against Nashville. Zaitsev was paired with Jake Gardiner, his regular partner, at practice.
For Matthews, it has been 10 games as a spectator with his latest injury, his third of the 2017-18 regular season after he missed four games in November with a back issue and then sat for six in December because of a concussion.
Thursday will mark four weeks since Matthews was hurt when he was sandwiched by the New York Islanders’ Cal Clutterbuck and Adam Pelech in a game at the Air Canada Centre.
A major bonus for Matthews in his recovery has been the fact he has been able to skate though much of his recuperation. That was not the case when he was out with his previous two injuries.
It’s worth noting that Matthews scored two goals versus the Montreal Canadiens upon returning on Nov. 18 from his back injury; in his first two games upon coming back from a concussion, he scored a goal in each.
Mike Babcock said a final decision on the participation of Matthews and Zaitsev against the Predators would be made on Thursday morning, but the Leafs coach was talking as though it would be a rubber stamp.
“This is going to be the best opportunity for (Matthews) because he has been able to skate and compete,” Babcock said. “The other times he was not able to do anything.
“To get him back … it’s still going to be going way faster than he has been practising, so there is going to be an adjustment period, but he’s a good player and he will figure it out.”
Defenceman Morgan Rielly didn’t think Matthews will take long to find his footing. Rielly missed six games in late January/early February with an arm injury, so knows what Matthews could be feeling.
“You’re nervous and you just want to get back into it,” Rielly said. “You play your first shift a bit hesitant, but after that it’s important you get back to yourself.
“It’s never easy, but Auston is one of those guys that I will imagine it won’t take long for him to get back into a rhythm.”
And there’s the trickle-down effect through the forward lines with Matthews in uniform.
“Guys are used to playing with certain players and when everyone is healthy, I think you get better chemistry throughout the entire lineup,” centre Nazem Kadri said. “Certain guys don’t have to play with different guys constantly and it’s just more of a set group, so I think it’s going to help us.”
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