A coalition of small fantasy sports operators have come together in a bid to represent the interests of operators beyond the industry leaders FanDuel and DraftKings.
The Small Business Fantasy Sports Trade Association (SBFSTA) is intended to protect the interests of smaller operators who feel that the Fantasy Sports Trade Association, the body established in 1999 to represent all operators in the industry, has been co-opted by DraftKings and FanDuel to pass legislation that effectively closes the market to smaller operators.
A key goal of the SBFSTA will be to amend proposed regulations in New York State, namely Senate Bill S6793, which would impose rigorous controls on the sector, including a $500,000 fee for licensing and a 15 per cent tax on gross revenue.
Smaller DFS operators believe that such fees will force them out of the state, effectively granting FanDuel and DraftKings a duopoly on the activity. Both firms support the proposed legislation in New York.
“Policy makers and the public have been led to believe that DraftKings and FanDuel speak for all fantasy sports operators,” the SBFSTA said. “They do not.”
“We will take this fight across the country on behalf of all of the fans,” the association’s spokesman Alex Kaganovsky said. “We will not stand by while the two major players in the industry, which have direct financial ties with three of the major professional sports leagues, are permitted their own duopoly in New York.”
Kaganovsky dismissed Bonacic’s proposal as “little more than a concealed effort by DraftKings and FanDuel to eliminate competition by driving out the hundreds of small operators who cannot possibly pay the high fees and taxes called for in the legislation.”
"We are very grateful to Senator John Bonacic and Assemblyman Gary Pretlow for hearing our voices during our trip to Albany,” he said. “And while we are hopeful that changes will be made to keep us viable, we remain concerned that the DraftKings and FanDuel legislation, as written, would be devastating to small fantasy sports businesses across New York.”
He said that “mom and pop-type businesses” count for around 95 per cent of the fantasy sports industry, showing there is much more to the sector than DraftKings and FanDuel.
“Small businesses have been the lifeblood of this industry for decades,” Kaganovsky said.
Matt Schauf, an analyst for SBFSTA member DraftSharks, said the ripple effect of the legislation would be enormous.
“There are lots of small vendors that rely on each other. If one business goes under, others will start falling like dominoes,” he said. “This is tantamount to moving the goal posts in the middle of the game, only the fans are the ones who end up losing. There is absolutely no way that any small game operator can pay a $500,000 fee.”
The SBFSTA points to legislation recently passed in Virginia and Indiana - which they say allows DraftKings and FanDuel to operate while making it impossible for smaller operators to do so - as proof that the FSTA has been co-opted by the two industry leaders.
“DraftKings and FanDuel do not speak for everyone,” Schauf said. “They are steamrolling our businesses and drowning out our voices, and it needs to stop.”