DraftKings Rescues Stricken FantasyHub, Honors Player Balances
Posted on: March 14, 2016, 04:08h.
Last updated on: March 14, 2016, 06:52h.
Draftkings will pay hundreds of thousands of dollars owed to DFS players by the ailing FantasyHub, the company has announced.
FantasyHub was an Austin, Texas-based DFS start-up, which as its USP allowed its customers to donate a portion of their winnings to charity. But the site suspended its operations on February 19, leaving its players in the dark and unable to access their funds.
In one of the few communications from the company to its anxious players, management made reference a “third-party” who might rescue the situation.
Enter DraftKings, which said this week that FantasyHub owed a few hundred thousand dollars to a few thousand players and over $100,000 to charity. The DFS market leader neglected to say what exactly had caused FantasyHub’s sudden implosion.
The Best of a Bad Situation
As a member of the Fantasy Sports Trade Association (FSTA), FantasyHub was supposed to have kept its players funds segregated from its operating funds, which does not appear ultimately to have been the case.
But in the absence of a regulatory body there is no way these business standards can be enforced. Members of FSTA merely pledge to abide by its rules.
For DraftKings, which is currently engaged in messy legal proceedings with the New York State Attorney General’s Office, the bad press surrounding FantasyHub’s demise was the last thing it and the DFS industry needed. But it also offered an opportunity to turn a bad situation into a minor PR coup.
Not an Acquisition
“This is not an acquisition deal or an asset purchase deal,” DraftKings co-founder Matt Kalish told ESPN. “This is a very simple deal, where we’re assigning two liabilities from [FantasyHub] over to DraftKings in an effort to do the right thing for their player base, which has a nearly 80 percent overlap with our own.
“We never want to see our player base got through an experience that’s negative like this. What happened here was reprehensible. It is a breach of trust for these players and we share a lot of these players with them. We just didn’t think it was the right thing to do to sit on the sideline and let that happen. We had the ability to step up and do something.”
In order to receive their balances, FantasyHub customers are required to open DraftKings accounts or contact the company with details of a pre-existing one. Once they receive their funds they may withdraw them immediately and without further obligation.
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