Are DraftKings and FanDuel Running Out of Cash?
Are DraftKings and FanDuel finally running out of cash? That’s the suggestion being made by the New York Times, Deadspin, and other media outlets on the eve of the daily fantasy sports giants long-awaited settlement with New York State.
According to a report in yesterday’s New York Times, DraftKings and FanDuel are both behind in payments to vendors and FanDuel has laid off more than 60 employees.
Even more damning, in the Times’ eyes, anyways, is the fact that both companies are negotiating payment plans with New York State to settle claims that their advertising contained fraudulent claims (it turns out it’s not so easy to win a million dollars playing daily fantasy sports after all).
The price of these negotiated settlements is somewhere between $8-$10 million. That should be just a drop in the bucket for the companies that burned through hundreds of millions of dollars on a legendary ad blitz last year. Apparently, that’s just not the case.
The Times goes on to report that both companies are behind on their payments to vendors. While it’s worth noting that there are many reasons why a company could find itself in this position, a lack of cash is usually the most likely explanation.
That said, it’s fair to say that both companies are burning through mountains of cash as they mount a state-by-state fight to keep their businesses on the right side of the law.
For their parts, DraftKings and FanDuel have not yet commented on why they’re so keen to pay out the State in payments, rather than getting the whole thing done at once. In a statement to the press, a spokesman for FanDuel said that they were not at liberty to talk about the settlement at this time.
In short, it’s clear that the good times are truly over for the US-facing daily fantasy sports industry and the bad times just keep rolling on.