DraftKings Told to Stop Claim of ‘Largest US-Based’ Daily Fantasy Sports Site

Posted on March 24, 2015 - Last Updated on April 7, 2015

The National Advertising Division has recommended that DraftKings cease its claim of being the “largest U.S.-based” fantasy sports website, after a complaint by FanDuel.

No. 1 vs. No. 2

DraftKings regularly makes the claim of being the largest DFS site in its advertising, despite the fact that FanDuel leads in the two most germane metrics: users and guaranteed prize pools.

But DraftKings does not contend that it is actually larger than FanDuel, according to the NAD; rather DraftKings bases its claim on the idea that FanDuel is not truly “U.S.-based.”

The recommendation came from the NAD, which is the investigative arm of the Better Business Bureau that looks into claims of false advertising in the United States and Canada.

There are two different claims that DraftKings makes in its advertising that FanDuel takes issue with, according to a press release from the NAD:

  • DraftKings is the “largest U.S.-based destination for daily fantasy sports.”
  • DraftKings is the “the largest, US-based online gaming destination where players engage in daily fantasy sports competitions across fantasy professional football, baseball, golf, basketball, hockey and soccer, and college football and basketball.”

What counts as U.S. based?

The NAD, however, did not buy the argument that FanDuel is more of a Scottish company than an American one.

DraftKings asked the NAD to use the “nerve center test” — a Supreme Court precedent about the citizenship of a corporation — to determine where FanDuel is based. The NAD noted in its opinion FanDuel does have ties and operations to Scotland — including CEO Nigel Eccles that’s far from enough to say the company is based in a country other than the United States.

From the NAD opinion:

…the Chief Marketing Officer, Chief Product Officer, Chief Financial Officer and 74 percent of the next leadership tier are based in the U.S. Further, FanDuel noted, the company is incorporated in Delaware, has its bank accounts in the U.S., and maintains its headquarters in New York City. The company’s website and mobile application are hosted on servers within the U.S., and the terms of use and privacy policy are governed by U.S. law.

The claim isn’t completely without merit.

FanDuel’s LinkedIn page says that its office in Scotland “houses most of its engineering, development, and design teams.” And the site has been honored as a “star of the Scottish technology industry.”

Change, or agree to disagree?

It’s not entirely clear if DraftKings will actually change its commercials or other advertising, noting that it “respectfully disagreed” with the recommendation.

“We value the self-regulatory process, however, and will take the NAD’s recommendations into consideration in future press releases and advertising,” the company said, according to the NAD.

Last year, DraftKings did say it would abide by an NAD recommendation to stop referring to itself as the “industry leader and No. 1 destination for fantasy sports.”

Ads an issue on a few levels for DFS industry

Both FanDuel and DraftKings also face recently filed lawsuits — not against each other — over other advertising claims.

Both sites offer “deposit bonuses” in which players make a deposit, than receive a matching bonus from the sites that unlocks as players enter real-money contests. The “matching bonus” claim is made by companies throughout the DFS space — and most sites employ a similar technique of how players can unlock the bonus.

The sites are being taken to court for how they advertise the bonus; plaintiffs claim that the bonus is presented as if it will be instantly available for use, which is not the case.

DraftKings and FanDuel face very similar lawsuits over their bonus claims, although the actions are being brought under different laws in Florida court: under the Florida Free Gift Advertising Law in the DraftKings lawsuit, and under the Florida Deceptive and Unfair Trade Practices Act in the FanDuel suit.

Photo by Jnn13 used under license CC BY-SA 3.0.

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

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