[toc]Daily fantasy sports operator FantasyHub has ceased operations “temporarily” while owing money to users who have been unable to make withdrawals.
FantasyHub is a small operator that differentiated itself by allowing players to donate winnings to charity, and by running contests specifically to benefit some non-profit organizations.
This is at least the second time a DFS operator has ceased operations while owing players money in recent months. The first, FantasyUp, was taken over by iTEAM Network, which is in the process of making players whole.
The message from FantasyHub
The following message was posted at the FantasyHub website on Friday morning:
FantasyHub has temporarily suspended operations.
Further updates have been made via email.
We apologize for any inconvenience this may cause, but we are currently in discussions with a strategic 3rd party regarding the future of FantasyHub & its players.
Your FantasyHub Team
The email offers little in the way of more details, saying, in part:
Thank you for your patience. We sincerely apologize for the radio silence over the past few days.
Due to advice from counsel, we cannot divulge many details but we have been in discussions with a strategic third party regarding the company and are now finalizing those discussions.
While we can’t say more at this time, we’ll be in touch very soon with full information.
What we know about FantasyHub
Players no longer have access to their accounts; all functionality has ceased.
At least one affiliate has taken action, filing a lawsuit against FantasyHub.
Sam Shefrin, of Daily Fantasy Cafe, offered this statement: “We have filed suit in order to collect outstanding invoices for advertising totaling more than $14,000.00”
FantasyHub offers no reason for why players cannot access their funds now, nor why they have not been able to. The negative publicity associated with having problems paying players and ceasing operations does not seem to mesh with actively working with a “strategic third party.”
Before Friday, players had anecdotally reported having issues withdrawing on the forums at RotoGrinders.com.
FantasyHub is an FSTA member
While FantasyUp was not a member of the Fantasy Sports Trade Association when it became insolvent, FantasyHub is a member of the FSTA and attended the organization’s winter conference in Dallas last month.
While the FSTA is not an enforcement body, it is the organization that is currently promulgating regulations that have popped up in more than half of state legislatures. It also has a “paid-entry contest operator charter” in which member companies are supposed to take steps to segregate player funds.
From the charter:
The signatory company will hold player funds (whether they are funds on deposit, or as entry fees in live games) separate from their operational funds. Player funds will not be used to fund the growth of their business and at no time are player funds at risk if the company were to cease doing business. Notwithstanding the above, signatory companies recognize that all prizes are paid from the general assets of the signatory companies, and the winners are not paid out of a pool consisting of funds received for any given contest. Stated another way, signatory companies recognize they must pay winners of a contest the announced prize irrespective of the amount of funds received from entrants in that particular contest. Further, it is recommended that each company has an annual audit performed, ensuring that the appropriate player funds are being segregated.
While the details of what is going on behind the scenes at FantasyHub are unknown, it’s difficult to square the possible segregation of player funds and operational funds while shutting down operations, even temporarily.
To what extent the FSTA goes to ensure compliance with the charter is unknown, but enforcement of the charter is not its primary mission. The punishment for not following the charter is revocation of FSTA membership.
Also of note: In 2015, the FSTA board voted to change the charter to lessen the efficacy of the enforcement mechanism.