DraftKings Making FantasyHub Players, Charities Whole
Daily fantasy sports (DFS) leader DraftKings has not gotten a lot of positive press in recent months. During the American football season, it seems that most news articles about the site revolved around its incessant commercials; that news eventually transitioned to articles about the site’s legal problems in various states. Today, though, DraftKings gets some positive press, even if it stemmed from something unfortunate. Last night, ESPN’s David Purdum was the first to report that DraftKings is going to make good on funds owed to both players and charities by DFS competitor FantasyHub.
FantasyHub was a small DFS site, nowhere close to the size of DraftKings, based in Austin, Texas. Its unique hook was that a portion of each prize pool in its contests was earmarked for charity. Thus, while that meant a bit less money went to the players, winning players actually got to pick the charity to which their portion of the donation would go. FantasyHub kept a running tally of its total donation on the front page of its site and players could see how much money they had contributed to charities themselves on their account page. The standings for each contest also displayed which charity each player supported; players could select different charities every contest.
This writer was a FantasyHub customer – the charity aspect was what initially attracted me to the site. From my experience, the site was easy to use, customer service was excellent, and the games were ultra-soft. I only ever did some basic research for each week of the NFL season and I think I profited every week.
But it appears that things were not quite right behind the scenes, as FantasyHub shut down on February 19th, leaving customers wondering where both their own funds were and what was going to happen to the money that was supposed to go to charity (some charities had been paid prior to the shutdown). Most people assumed their funds were gone, that this was another case of an online gambling site (or skill-game site…whatever) engaging in funny business and running off with players’ money. There was a lot of hand-wringing on internet forums, but no real information until yesterday.
On Thursday, March 10th, DraftKings sent an e-mail to FantasyHub customers, letting them know that DraftKings is going to cover all outstanding FantasyHub player balances and all donations that were promised to charity. In order to claim their funds, FantasyHub customers can transfer their accounts to an existing DraftKings account or create a new DraftKings account and then initiate the transfer. There are no playthrough requirements at all; FantasyHub funds can be withdrawn immediately.
No details of what exactly happened at FantasyHub have been released, though DraftKings has implied that something less than kosher was going on, saying in the e-mail, “DraftKings is aware of the allegations regarding financial mismanagement at FantasyHub and we understand that this has impacted your ability to access your funds. This news is a troubling breach of trust for you, as FantasyHub players and as members of the fantasy sports community.”
Purdum has been trying to get an explanation from FantasyHub founders Andrew Busa, Steven Plappert and Chris Pierce, but was told that they could not comment at this time. He also wrote that discussions of how to bail out FantasyHub had been going on for several weeks.
DraftKings co-founder Matt Kalish told Purdum that his company has not purchased either FantasyHub’s assets or the site as a whole; it is simply taking on its debts and making good on them:
This is a very simple deal, where we’re assigning two liabilities from [FantasyHub] over to DraftKings in an effort to do the right thing for their player base, which has a nearly 80 percent overlap with our own. We never want to see our player base got through an experience that’s negative like this. What happened here was reprehensible. It is a breach of trust for these players and we share a lot of these players with them. We just didn’t think it was the right thing to do to sit on the sideline and let that happen. We had the ability to step up and do something.
Cynics will likely look at this and see it as a convenient public relations move, as a way for DraftKings to improve its image for state Attorneys General, legislators, and the general public. It’s a hefty chunk of change, but if it could help DFS in the long-term at all, it will be a drop in the bucket compared to the profits that can be made in the industry.
Regardless of the motives behind the move, what DraftKings is doing here is most definitely a good thing. Word from players who have attempted the account transfer and cash out is that the withdrawals went very smoothly.
DraftKings told ESPN that “a few hundred thousand dollars” are owed to players and over $100,000 is owed to charities.