Attorney Andrea MacIver writes how DraftKings and FanDuel are changing how we do business.

April 26, 2017

Attorney Andrea MacIver wrote “SHOOT NOW, ASK QUESTIONS LATER: HOW TECHNOLOGY-BASED STARTUPS DRAFTKINGS AND FANDUEL ARE CHANGING THE WAY WE DO BUSINESS” for the Quinnipiac Law Review, Vol. 35, Rev. 217.

I. INTRODUCTION

“We were really focused on how to get a business started, how to raise capital, how to find an office. We weren’t thinking along the lines of regulatory[.]”
–Janet Holian, Chief Marketing Officer at DraftKings. 1

If you follow sports, or just happened to watch a professional football game in 2015, you know the names DraftKings and FanDuel. 2 Both companies’ ads inundated the media in 2015, especially during the start of the NFL season, making “DraftKings” and “FanDuel” household names. 3 This surge of media presence coincided with a massive influx of money from investors into both companies, 4 which, to many, was a sign that DraftKings and FanDuel were here to stay. All the media attention and money exchanging hands in 2015, however, quickly put DraftKings and FanDuel on the radar of many– including attorneys general who began declaring daily fantasy sports illegal in their respective states. 5Illegal? What about the millions of users? 6 The high-profile investors? 7 The multi-million dollar daily fantasy sports industry? 8 How was it that the legality of daily fantasy sports was only now being questioned? As DraftKings’s Global Chief Marketing Officer Janet Holian conceded, when the founders started DraftKings, they were focused on getting their business up and running and simply were not thinking about laws and regulations that might affect the legal status of their company at some point down the road. 9 The founders simply were not asking questions about the legality of their company and fantasy sports. Although some may argue that it would have been prudent to ask such questions and sort out any legal issues before entering the market, the fact that DraftKings and FanDuel did not do this until after entering the market and doing business for several years may be the saving grace for daily fantasy sports. This Article argues that, planned or unplanned, the fact that DraftKings and FanDuel are dealing with legal and regulatory hurdles several years after having entered the market is one of the reasons, if not the reason, why these companies will survive and continue to prosper in the future. In this way, DraftKings and FanDuel are changing the way we do business in the United States. While it is generally not advisable to “shoot now and ask questions later,” in the case of technology-based startups, DraftKings and FanDuel are teaching us that doing so just may be your best bet.

35 Quinnipiac L. Rev. 217

1 Jason Schwartz, How DraftKings-Boston Love Affair may have Saved Daily Fantasy, ESPN (April 12, 2016), http://espn.go.com/espn/otl/story/_/id/15164559/how-draftkings-wooing-boston-helped-dailyfantasy- industry-nationwide. (“When [Jason] Robins and his co-founders, Matthew Kalish and Paul Liberman, started DraftKings in 2012, none of them envisioned having to tangle with government rule-makers, according to Janet Holian, an early adviser for the company. ‘We were really focused on how to get a business started, how to raise capital, how to find an office. We weren’t thinking along the lines of regulatory,’ says Holian, who joined DraftKings full time in January as global chief marketing officer.”’) Id.
2 One Boston Globe article explained: iSpot.tv, a company that tracks commercial airings, has estimated that DraftKings spent about $156 million on TV ads last year, airing 25 different ads more than 46,000 times. From late August to mid-September—the period around the start of the NFL season–DraftKings ran more TV commercials than any other advertiser in America, iSpot.tv said. Curt Woodward, Latest round of fund-raising for DraftKings falls short, BOSTON GLOBE, (Feb 13, 2016), https://www.bostonglobe.com/business/2016/02/13/draftkings-said-raise-million-recent-fund-raisingdeal/mymr9nKV7QQmpkFhRY3bkM/story.html.
3 See Neil Swidey, Inside DraftKings’ War Room as the Fantasy Sports Battle Rages, BOSTON GLOBE (Dec. 3, 2015), https://www.bostonglobe.com/magazine/2015/12/03/inside-draftkings-war-room-fantasy-sportsbattle-rages/DAX8tBAZBOEX9kr6zoeOfM/story.html.
4 See Darren Heitner, The Hyper Growth of Daily Fantasy Sports is Going to Change our Culture and our Laws, FORBES (Sept. 16, 2015), http://www.forbes.com/sites/darrenheitner/2015/09/16/the-hyper-growth-ofdaily-fantasy-sports-is-going-to-change-our-culture-and-our-laws/#4a975c5f254b.
5 See Joe Drape, Payment Processor to Stop Working with Daily Fantasy Sports Clients, N.Y. TIMES (Jan. 30, 2016), http://www.nytimes.com/2016/01/30/sports/draftkings-fanduel-vantiv-daily-fantasy.html?_r=0.
6 See Fantasy Sports Trade Association, Industry Demographics: Actionable Insights & Insightful Data, FSTA, http://fsta.org/research/industry-demographics/ (last visited July 24, 2016).
7 See Heitner, supra note 4.
8 See Joshua Brustein, Fantasy Sports and Gambling: Line Is Blurred, N.Y. TIMES (Mar. 11, 2013), http://www.nytimes.com/2013/03/12/sports/web-sites-blur-line-between-fantasy-sports-and-gambling.html?pagewanted=all&_r=1&.
9 See Schwartz, supra note 1.