Ed note – This is a guest piece provided by Christy Keenan of DailyFantasyLobby.com.
PokerStars is the biggest name in online poker – and it its parent company is now setting its sights on DFS dominance. Yet could such a move have the sort of legal repercussions that will cause the Fantasy Sports Trade Association sleepless nights?
Last year, gaming products provider Amaya produced one of the biggest curveballs in recent memory by acquiring the Rational Group and its flagship brands PokerStars and Full Tilt for $4.9bn.
Amaya’s intentions quickly became clear. Through PokerStars, Amaya already has online poker in a stranglehold; now it wants to spread its dominance to other avenues. Casino games – already a feature of Full Tilt – have been rolled out on PokerStars, and a sports betting platform is in a soft-launch state.
Daily Fantasy Sports will reportedly follow in time for the 2015 NFL season.
Why Daily Fantasy Sports – and why Amaya?
The appeal is obvious.
Since Black Friday in 2011, PokerStars and Full Tilt have effectively been locked out of the US market. The brands, once synonymous with poker in America, have faded from the public consciousness. Amaya is attempting to rectify that in Q3 2015, when PokerStars is expected to re-enter the US poker market by launching in the online poker-friendly state of New Jersey.
And now they want their piece of the DFS boom.
Amaya didn’t spend nearly $5bn to acquire the Rational Group to then act tentatively. Regulated online poker is still unavailable in 47 states, and their sports betting and casino offerings are unequivocally prohibited stateside.
Daily fantasy sports provides Amaya with an immediate route back into US territory – in an industry that to date has avoided the murky legal implications that have befallen poker.
So it is easy to see why DFS appeals to Amaya. The real question is: does Amaya appeal to the DFS world?
In January, DFSReport.com quoted a keynote speech by Fantasy Sports Trade Association President Paul Charchian, in which he stressed the need for distance between DFS and gambling. The term ‘rake’ – in layman’s terms, ‘the house’s cut’ – is too reminiscent of gambling terminology for the FSTA’s tastes.
At Daily Fantasy Lobby, we refer to ‘operator margins’ to sidestep the ‘rake’ debate, but it does leave one pertinent question unanswered.
Can distancing language have an impact when DFS and poker appear to be closely linked?
In March at LegalSportsReport.com, Chris Grove wrote that, “The presence of the PokerStars brand will impact the way that policymakers perceive daily fantasy sports, most significantly on the matter of how close the activity is – or isn’t – to a state’s definition of gambling.”
Until online poker returns nationwide, any association with it is enough to make the sweat form on the FSTA’s collective brow. As a post-UIGEA invention, DFS operators had the benefit of a black-and-white law around which to create the format.
It was invented to comply with the legal stipulations of which poker was deemed to have fallen afoul. However, DFS is susceptible to the same laws as poker.
The game’s legal status still hinges on the thin dividing line between ‘chance’ and ‘skill’, judged on a state-by-state basis. And the FSTA is still wary of anything – including simple terminology – that could blur the line even further.
All of this suggests that the introduction of Amaya into the DFS market could be one giant headache for the FSTA – and it seems unlikely that these developments will have escaped the beady eye of the Department of Justice.
A few short months ago, the FSTA was preaching the importance of avoiding terminology that is associated with games of chance (which poker is still seen as in 47 states, rightly or wrongly). Yet professional poker players are becoming DFS pros, DraftKings sponsors the World Series of Poker Main Event, and now the parent company of the two sites synonymous with online poker is entering the DFS space.
Indeed, it’s right there in the name: POKERStars. All of the careful language in the world won’t count for much if the market leaders themselves are blatantly promoting the crossover between the two domains (minus FanDuel, which has consistently kept poker at arm’s length).
Is this all a bit too close for comfort?
The perfect solution for Amaya?
In a video for DailyFantasyLobby.com, I remarked that Amaya has the perfect solution right under its nose.
Rather than taunting the DOJ and flaunting the preached caution of the FSTA by offering DFS under the PokerStars banner, DFS gives Amaya a wonderful opportunity to resurrect the stuttering Full Tilt brand.
As per PokerScout.com, Full Tilt Poker is floundering in sixth position on the global poker traffic table as of May 2015. The players have shown few signs of deserting the superior software and traffic of PokerStars and returning to Full Tilt. The brand’s future success may lie away from the felt.
DFS would be the perfect outlet.
- The brand-name Full Tilt has fewer game-of-chance implications than PokerStars – thus ensuring that it is objectively more adherent to the legal boundaries.
- Amaya still has the combined marketing power of Full Tilt and PokerStars’ enormous global database at its disposal – believed to be close to 100 million users.
- Despite the new ownership, the tarnished Full Tilt brand has failed to recover from being off-line and struggling to pay its players their account balances post-Black Friday. It would start with a blank slate in DFS.
There can be little disputing that the Venn diagram of poker and DFS features an overlap. The only question is, is the amount negligible (as claimed by FanDuel, and as intended by the FSTA), or is it significant (as freely acknowledged by DraftKings, and as suggested by Amaya’s decision to enter the market)?
One thing seems certain: the larger the overlap, the more likely it is that the DOJ will turn up the heat on the operators.
FanDuel and DraftKings are hoping that their affiliations with top NFL, NBA, MLB, and NHL teams provide them with a degree of mainstream legitimacy and distance them from gambling, game-of-chance connotations.
The very name PokerStars is likely to hinder such progress, and this is why it might be best for all parties if Amaya enters the DFS space under its Full Tilt banner.