Top daily fantasy sports providers FanDuel and DraftKings are reportedly suffering from financial strain, being unable to pay vendors for months as well as having issues with cashflow. New York Times Joe Drape has reported that both DFS operators are close to a settlement with Eric T. Schneiderman, the Attorney General of New York, where both companies will be paying anywhere from $8 million to $12 million. Both companies have asked to pay the amount in installments, seemingly due to financial difficulty.
DraftKings and FanDuel have been working to reach a settlement with the New York AG for some time based on complaints of false advertising. The Attorney General placed false advertising claims on the two companies due to advertisements which claimed an easy game that anyone could use to win big money yet from 2013 to 2014, around 90% of players lost money.
In the report, it states that two people who are familiar with the negotiations between the two DFS operators has said that the companies have asked the office of the AG if they can make the payment in installments and that they are having difficulty completing day to day operations. In the past three weeks, FanDuel has laid off over 60 individuals and both companies have stated that they are behind in payments to vendors by several months. This includes lobbying firms and public relations groups who DraftKings and FanDuel hired to try and convince state legislators to legalize daily fantasy sports.
Commenting on the negotiations with the New York AG, a spokeswoman for FanDuel, Justine Sacco, stated that the company cannot comment on the details but can confirm that they have been in ongoing settlement negotiations with the attorney general’s office in New York. Sacco stated that AG’s office has been tough but fair and they hope to reach an acceptable resolution soon.
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