During these midterm elections in the United States in November, gambling was a hot topic in many states. Some states elected new governors who are clearly on board with bringing regulated sports betting to their states, while the states like Florida voted on issues to take the state backwards in the gambling world.
In Louisiana, however, it felt like it was 2014 all over again, as on the ballot was a decision to be made by residents of that state on the future of…Daily Fantasy Sports. To make matters even more interesting, the two main players in the DFS space, Draft Kings and FanDuel, worked together on a lobbying effort to change the laws regarding DFS in the state.
What was at stake?
If you haven’t been following the Daily Fantasy Sports world recently, that is understandable considering that all the oxygen in the room is being sucked up by regulated sports betting.
However, Louisiana is one of a handful of states that made the game illegal for operators, forcing all the players to close accounts from residents of the state. The proposition on the ballot on November 6th was to allow DFS to be open again to Louisianans.
The results of the vote were interesting to say the least. Each county was voting on the issue separately, giving them the choice to make DFS available rather than deciding on a state level.
This means that there would have to be a new level of ringfencing not yet faced by any online gambling company. Also, there are still a few hurdles left to clear, including passing legislation that likely won’t be tabled until April of 2019.
Why Would the two competitors work together?
It would be easy to be surprised to hear that both Draft Kings and Fanduel would eb working together on passing this legislation, especially given that they are mortal enemies in business.
However, if there is one thing that the two companies must have learned in the last 5 years is that trying to outspend each other is a losing proposition. Ultimately, the revised legislation would be a benefit to both companies and working together with one lobbyist meant less of a broken record when speaking out on the issue.
Both companies agreed to put $500,000 into a lobbying effort and PR campaign meant to sway voters to their side. It is safe to say that while the vote wasn’t 100% in their favor, that both companies are pleased with the result.
Why is DFS so important to these two companies in Louisiana?
One question that has been raised is why these Daily Fantasy leaders would be bothered with fighting for that business given that both are now firmly entrenched in the sports betting market.
Well, there was no sports betting proposition on the docket during this election and given the conservative approach that the state took to DFS originally, one can imagine how slow-moving the state legislators will be on implementing sports betting legislation.
By getting the DFS ban lifted, companies like Draft Kings and FanDuel can benefit in multiple ways. First and foremost, they can resume accepting players from Louisiana, which will definitely help their revenues and bottom line.
In addition, this gives both companies a chance to create massive databases of sports-minded players from the state while the argument about sports betting continues.
In a perfect world, both Draft Kings and FanDuel will be operating a sportsbook in the state, and as was shown by the huge early numbers for Draft Kings in New Jersey, having a database of potential gamblers will put both companies at an advantage over their competitors.
While we wait to see how the results of the vote in Louisiana shape the Daily Fantasy Sports market, you can be sure that both Draft Kings and Fanduel have asked their lobbyist to move on to the golden goose in the state – regulated sports betting.