It appears as though Major League Baseball and the NBA are attempting to get out of the daily fantasy sports industry, at least when it comes to their equity stakes in DraftKings and FanDuel.
What we learned about leagues and DFS
The report came from ESPN’s Darren Rovell on Thursday afternoon, initially via Twitter:
Sources: MLB, NBA have begun discussions with DraftKings & FanDuel to exit their equity positions; both leagues will remain partners with their respective companies.
— Darren Rovell (@darrenrovell) April 19, 2018
That report was quickly backed up — if not fully confirmed — on one side of things, as both FanDuel and the NBA offered brief statements in the wake of Rovell’s report.
Statement of NBA regarding partnership with daily fantasy operator FanDuel: pic.twitter.com/DY9sApTcDX
— David Payne Purdum (@DavidPurdum) April 19, 2018
DraftKings provided this statement on its relationship with MLB:
“Major League Baseball was the first professional league to invest in DraftKings and their partnership over the last five years has been instrumental to our growth and success. Our ties to MLB are as strong as they have ever been. As two organizations that place fans at the core of their business, DraftKings and Major League Baseball will be working closely together going forward so baseball fans around the world continue to have the most engaging experience possible with the sport they love.”
Backstory on pro sports and DFS
The NBA took an equity position in FanDuel in 2014. The integration of FanDuel and the NBA has grown over the years. FanDuel integrated NBA League Pass into its platform, and also developed a free fantasy app called InPlay for the league.
MLB has reportedly held equity in DraftKings dating back to 2013. DraftKings became the official daily fantasy partner of MLB in 2015.
DraftKings has team-level deals in place with almost every Major League franchise, as well.
The NHL also has equity in DraftKings. Just today, Formula One took an equity position in another DFS operator, PlayON.
DraftKings and FanDuel had planned a merger, but that fell through under anti-trust concerns in 2017.
Sports betting an issue?
The fact that all of this came out at the same time from the NBA and MLB is hardly a coincidence.
The two leagues have been lobbying around the country for sports betting legislation friendly to them, should the federal ban be struck down by the US Supreme Court sports betting case this spring.
At the same time, they’ve faced questions from lawmakers about their equity in the two DFS operators. DraftKings, for its part, is openly trying to get into sports betting.
It’s one thing for the leagues to want to profit from sports betting from things like integrity fees or data rights; it’s altogether different for the leagues to actively own part of a sportsbook. The optics of actively being in the sports betting business would be poor for either league, given their histories with sports gambling.
Of course, FanDuel has not made its intentions on the sports betting front known. But it appears the NBA and MLB are going to be in lockstep when it comes to sports gambling. And that means lessening their direct involvement with FanDuel and DraftKings.
What’s it all mean?
In the grand scheme of things, maybe not much.
NBA and MLB are making the move mostly to keep up appearances. Much of the relationship — including checks being cut by DraftKings and FanDuel for marketing — sounds like it will stay in place. The mechanics of where the equity stakes go is unknown, although it appears likely to go to the companies or existing shareholders via purchase.
Still, it’s slightly shocking to see MLB and NBA loosen the bonds with the two companies that they were big believers in just a few years ago.