FanDuel Is Joining DraftKings With A Daily Fantasy Golf Offering

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FanDuel is late to the game on the daily fantasy golf, but perhaps late is better than never.

The daily fantasy sports operator will offer golf contests this year, as Yahoo Finance first reported.

FanDuel later issued a press release on its foray into golf:

“Over the past several months, we have been laser-focused on building a variety of new products such as NBA InPlay (a real-time fantasy basketball app) and our first fantasy soccer product in the United States,” Nigel Eccles, CEO of FanDuel, said via the presser.

“As we continue to expand our offerings, and with golf growing in popularity over the past few years, adding a fantasy golf product to our platform is an optimal way to keep sports fans engaged and get them excited for the golf tournaments coming up in 2017.”

That also means FanDuel will be joining competitor DraftKings in the golf business. The latter has been offering fantasy golf for several years now, and helped it grow into a segment where millions of dollars change hands during the biggest tournaments of the year.

The two companies plan to merge later this year.

A closer look at FanDuel’s golf product

FanDuel’s golf contests will not look exactly like DraftKings, it appears.

In daily fantasy golf, DFS users select a roster of golfers from a tournament; those golfers earn points for the user’s fantasy team. The users with the best lineups of golfers win cash prizes.

Here’s what the product will look like, according to FanDuel:

With a unique scoring system, users earn fantasy points based on a variety of individual scoring categories and bonuses for specific achievements. Additionally, instead of picking golfers who earn points over an entire tournament users pre-select golfers to compete in Rounds 1 and 2 and then a different group to compete in Rounds 3 and 4.

This new format offers users greater variety and more strategic options in building their roster of golfers, and will further enhance the excitement of the fantasy golf experience.

The contests will go live for The Masters in April, with a beta to proceed the launch.

Why now for FanDuel and golf?

This is the second new sport that FanDuel has launched in recent months. Daily fantasy soccer based on the English Premier League went live in the North American market in October. (It had already launched soccer in the UK earlier.)

There are certainly a couple of theories as to why FanDuel is going live with golf:

It’s still every DFS site for itself

Before the merger with DraftKings takes place, the companies are still on their own, and will continue to work in their own best interests.

There is at least some question if the merger will stand up to anti-trust scrutiny. The companies aren’t going to sit back and wait for the merger to take place. After all, FanDuel also recently went live with an in-game fantasy product in conjunction with the NBA, called InPlay.

FanDuel CEO Nigel Eccles has been eyeing daily fantasy golf dating back to at least 2015.

So it’s very possible FanDuel planned to do this, whether the companies merge or not. Going live before the year’s first major in golf — The Masters — could just be part of its strategy.

Priming the pump for the merger

Not all FanDuel users are on DraftKings, and vice versa, even though there is significant overlap between the platform’s user bases.

FanDuel could be getting its users prepared for a world where the sites merge and its users have access to golf.

That could be simply priming the pump, in which case we might see FanDuel possibly offer other sports DraftKings does in the near future.

It’s also interesting to note that the new commissioner of the PGA Tour openly talked about daily fantasy sports in a recent interview.

The legality of DFS for golf

The backdrop of all this is some tension regarding federal and state law vis a vis a daily fantasy golf product.

What the UIGEA says

The Unlawful Internet Gambling Enforcement Act has a carveout in its language for fantasy sports, as long as the contests meet these conditions:

All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.

Most of the state laws that legalized DFS in 2016 mimic the UIGEA language on this front.

There is certainly a lot of wiggle room for interpreting the meaning of “events” in the context of the fantasy contests. Is an event a single game? Or something that takes place within a larger tournament or event?

For instance, for the purposes of fantasy golf, could an “event” be a round of golf, or a player playing a single hole? Or would it have to be a an entire tournament? No court has ever weighed in on what an “event” is for UIGEA purposes.

What FanDuel’s CEO said about DFS for golf

FanDuel CEO Nigel Eccles once questioned the legality of a golf product a few years ago:

“We won’t be introducing fantasy golf. I think it is commercially attractive (it’s probably our next most requested sport) but I’m uncomfortable with the legality of it. Every time I have to make a decision like this I think whether the argument would stand up in court. To me a reasonable person would consider a golf tournament to be a single event, not multiple events.

Therefore it would not fall under the UIGEA safe harbor. That does not automatically make it illegal (it may still be a game of skill under state law) but it does make it more risky.”

FanDuel said its format of having users create different rosters for different rounds creates a new strategy element. However, the structure of the contest would appear to be a hat tip to this potential legal concern, and perhaps killing two birds with one stone.

DraftKings long offered sports that FanDuel has not, a decision that FanDuel likely at least partially based on legal concerns.

Which version of daily fantasy golf will survive?

Which iteration of the DFS golf product survives — FanDuel’s or DraftKings’ — post-merger could be telling about the new company’s risk tolerance on legal matters. Of course, there’s even a chance the new merged company could offer both.

Or, conversely, FanDuel’s version could just end up being a more popular way to conduct daily fantasy golf contests. Right now, DFS users’ golf lineups could be all but dead after one round, if their golfers perform poorly.

A second “lineup” within the contest could create more and longer engagement for the user. It also creates a more complicated product for the user to enter a lineup in the first place, however.

Regardless, the newest announcement makes it clear DraftKings and FanDuel are still separate companies for now, until they merge officially.

Katherine Welles / Shutterstock, Inc.