Daily fantasy sports betting is being attacked by many states for participating in online gambling. The fantasy sports sites FanDuel and DraftKings claim to be skill based games, and therefore not in conflict with anti-online gambling laws.
But as more states work to stop citizens from using these websites, legal bills are mounting up, and many winners are complaining about not being paid for their skillful picks.
Todd Smith of Ohio told the Cleveland Examiner, “FanDuel owes me $16,000.
“When I try to withdraw my winnings, it says it’s successful, but the next day the money is still listed on the websites current account balance. I need the money in my bank account and they can’t seem to pay me.”
Thousands of other winners have been complaining on sports fantasy discussion boards about the same issue. One user wrote, “I’ve lost so much on the site and finally won big and can’t get my money. I literally lost my house, wife, and kids from playing and I want my $250k.”
FanDuel told Mr. Smith via email, “At this time, we cannot withdraw the money from your account but should be able to in several weeks. In the meantime, keep playing our daily games and have fun! Try our $1,000 entry games to win even more money!”
Professor Gail Antonio of the University of Ohio told the Examiner, “Of course, they want him to keep playing so he will loose his $16,000 and they won’t have to pay him. That’s classic bookie culture. Over time, everyone loses.
“With lawsuits in several states including New York, their legal bills have to be enormous, and in order to pay them, they have to use all the money coming into the website.
“It makes matters worse when many users withdraw money at the same time and they don’t have the cash to cover it. It’s like a run on the banks, where withdrawals exceed deposits. This is what’s happening now, in addition to mounting legal costs, just to stay in business.”
Lawyer fees in each of the contending states will turn into the tens of millions quickly. Analysts estimate $50 million has already been spent delaying the case in court, in order to keep operating. Because of the uncertain future of online sports betting, investors are scared to invest any more money.
The payment processing company Vantiv Entertainment Solutions, which both FanDuel and DraftKings use, will be terminating their agreement with the sites at the end of February due to accusations that they are participating in an illegal practice. VES’s stock price has risen by 10% following their announced exit from daily fantasy gambling.
Other scandals have already enveloped the betting sites, including a recent controversy in which a DraftKings employee collected data from users and compiling it for use on FanDuel. The information offered him a huge advantage over other FanDuel players, a form of insider trading.
With ESPN, MLB, and the NBA as investors in the websites, the future of sports betting is unclear. In the future, regulation is needed to ensure play is fair and payments are guaranteed to the winners.
