DraftKings Continues To Go Where FanDuel Won’t, Signs Deal With NASCAR

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NASCAR DraftKings

DraftKings signed a three-year deal with NASCAR and is starting to offer daily fantasy contests based on the circuit’s races, the daily fantasy sports site announced on Thursday.

In the process, DraftKings signaled its continued willingness to enter new realms of daily fantasy sports — and perhaps test the legal boundaries of daily fantasy sports — by getting into contests for auto racing.

Details of the deal

The announcement came via press release today. Here are the major takeaways:

The talking points from Steve Phelps, NASCAR executive vice president and chief marketing officer, sound a lot like how other sports view DFS. He talked about fan engagement and a second-screen experience:

“Pursuing ways to connect with our fans on a daily basis while enhancing their viewing experience has been paramount to NASCAR, and fantasy sports is a core tenet of that strategy. We are committed to growing our fan base, increasing engagement and diversifying our audience and partnering with DraftKings will strongly support all of these efforts.”

There was no mention of what kind of cross-promotion and advertising will be a part of the deal, but it seems fair to assume that you will see DraftKings signage at racetracks and promotion of the site on NASCAR’s media platforms. And is a car on the top-level Sprint Cup series sponsored by DraftKings far behind?

Until this year, NASCAR used to be shown heavily on the ABC/ESPN family of networks, which would have made for an obvious tie-in for the pending deal between DraftKings and Disney/ESPN. However, a new TV contract in which all the races are shown on Fox and NBC networks started in 2015.

NASCAR contests: Legal?

There are already contests in DraftKings’ lobby for the Coca-Cola 600, which takes place on May 24. Much like other daily fantasy contests, players select a lineup of drivers in a salary-cap format. Players score fantasy points based on their drivers’ performance, including finishing position, laps led, etc.

Two of the contests offer guaranteed prize pools of $100,000.

Fantasy sports based on auto racing certainly isn’t something new, especially of the season-long variety. But DFS contests have not been as common.

Why is that the case? Of all the major sports that fit into the DFS model, auto racing and NASCAR are perhaps the sketchiest legally. The Unlawful Internet Gambling Enforcement Act — which provides a carveout in federal law allowing fantasy sports — contains this language to define a fantasy contest:

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.

And that last phrase is the rub. NASCAR daily fantasy contests are based on a single race, not multiple races, and that’s likely why we haven’t seen a wide-spread proliferation of auto racing DFS.

Obviously DraftKings’ lawyers have considered this — after all, the entire industry of DFS came about because of the UIGEA. But even the most liberal interpretation of the UIGEA makes NASCAR DFS contests look like a gray area, legally. So far, there have been minimal legal challenges to DFS under state or federal law.

Some also question the legality of golf and mixed martial arts contests, but those have a better argument in terms of the law. Daily fantasy golf is based on a single tournament — but one can argue that each round of golf played is its own event. In MMA, contests are usually based on a single fight card, which consist of multiple fights. Each fight, one would argue, is its own event.

The case for NASCAR is much more murky. Viewing each driver’s race as an independent event takes a little bit of imagination.

Where’s FanDuel?

FanDuel has been content to stick with the major North American professional team sports for its DFS offerings: football, baseball, basketball and hockey, with college contests for both football and basketball, as well.

Why is that the case? On NASCAR, specifically, we have an answer from FanDuel CEO Nigel Eccles, courtesy of an “Ask Me Anything” thread from RotoGrinders:

We spoke to our lawyers about that recently. The legal status is very negative.NASCAR doesn’t provide a lot of stats that you could construct a fantasy game around, and so any game quickly resembles sports betting. Unless that changes I can’t see us offering fantasy NASCAR.

For other contests, it’s pretty much a matter of speculation. But there are two main lines of thinking:

It could also be a combination of those factors. After all, DraftKings offers soccer contests and FanDuel does not. But, it seems safe to say that if FanDuel wanted to offer contests for those other sports, they certainly would.

FanDuel has also been focusing on trying to gain an advantage in the NFL market, the cash cow in the DFS industry. After a series of deals announced last month, FanDuel now has relationships in place with nearly half of the NFL’s teams.

FanDuel also made a splash by agreeing to a deal to sponsor Floyd Mayweather in his fight against Manny Pacquiao.

Other DraftKings deals

The addition of NASCAR to DraftKings’ stable raises to four the number of deals the site has with major sporting organizations:

DraftKings also had a deal in place with the WWE, although the scope of that is limited, since DK is not offering fantasy contests based on professional wrestling.

Legal Sports Report has also learned that DraftKings has a number of team-specific deals that had not been widely reported previously, although the scope and nature of the relationships with these teams is not known:

You can check out all of the previously known sponsorships between teams, leagues and fantasy sites here.