To the Underdog Community
We founded Underdog for a simple reason: to build games for American sports fans to increase their enjoyment of sports.
As you may have seen, the right to play our fantasy sports contests has recently come under attack. The attention is not organic - it's being directly fueled by the companies with a virtual monopoly in sports gaming: FanDuel and DraftKings.
They are waging a campaign in back rooms across the country, using their deep pockets and political muscle to try to influence government officials, and exerting their market power to influence our business partners. Today we're pulling this issue out of the shadows. We want the Underdog community to understand why and how FanDuel and DraftKings are working so hard to eliminate fantasy sports innovation, kill competition, and boost their bottom lines at the expense of sports fans.
FanDuel and DraftKings Are Afraid of Competition
Fantasy sports are central to American sports culture. Congress and state legislatures clarified the legality of fantasy sports under laws FanDuel and DraftKings literally wrote - long before sports redderr came onto the scene. When fantasy sports came under attack by politicians and casinos in the mid-2010s, we stood side-by-side, as did sports fans across the country, with FanDuel and DraftKings in that fight. Our industry won, and so did all fans who love sports.
When the Supreme Court later permitted states to legalize sports redderr, DraftKings, FanDuel, and their lobbyists went to work. But this time they wrote laws designed to make it hard for innovators to break into the brand-new sports redderr industry. The strategy worked and they had a near instant monopoly, capturing nearly 80% of the U.S. sports redderr market.
But Underdog and other companies innovating in fantasy sports and sports redderr threaten their monopoly. They've seen our company, and others, produce superior products, more exciting user experiences, and begin to challenge them for sports fans' attention - and they're scared that we will challenge their market positions. We're already bigger than they are in fantasy. Frankly, they should be scared.
The Incumbents Are Campaigning Against Competition in Backrooms
What do monopolists do when they are afraid of competition? They use their money, power, and influence to target competitors. That's the playbook FanDuel and DraftKings are following, leaning on backroom lobbyists and pressing business partners to do their dirty work for them. It's a classic play for entrenched big businesses who are afraid of competition.
We are already seeing what a world of sports games dominated by two big tech companies looks like.
FanDuel and DraftKings are squeezing the wallets of American sports fans by steadily increasing their fees and profit rates, while limiting successful players, as they pursue total control of the sports gaming market.
It's not really surprising: their leadership knows a lot about running monopolies. And if you preemptively Tweet about how important competition is, you're trying to convince yourself or the world (or both) of something that just isn't true.
Just as they're squeezing consumers, they're trying to squeeze any perceived competition out of existence. From their perspective, the earlier they stop competition, the better. That's why FanDuel and DraftKings have spent the last year using every lever available to them: leaning on state governments, the media, business partners, and advertising entities, to try to stop us from offering our products to you.
But they are going to fail.
FanDuel and DraftKings' “Legal” Arguments Fall Flat
They can't tell policymakers and others they don't like competition, so FanDuel and DraftKings have constructed a disingenuous narrative that our fantasy sports contests are illegal. The arguments are ironic, ignoring the letter of the law for the same flimsy “feels like sports redderr” line that critics have always lobbed at their paid fantasy sports contests. That's why, despite more than a year of effort and tons of lobbying dollars, FanDuel and DraftKings are losing the fight with regulators.
A clear, simple fantasy sports legal framework exists because of the laws they wrote and their claims directly contradict those laws. And it's pretty simple - under those laws, a fantasy sports contest must have three core characteristics:
- A game based on skill
- Use predictions on two or more athletes from different teams; and
- Have the outcomes based upon those athletes' accumulated statistics in real- world contests.
Every single one of our contests meets that simple definition. Fantasy sports is not limited to only FanDuel and DraftKings' salary cap contests. The laws they wrote say fantasy sports is far broader than just salary cap.
Equally important, in nearly every state where a sports redderr law has been passed, the law makes crystal clear that fantasy sports are not sports redderr. Explicitly, these laws state that if a contest is fantasy sports, it is therefore not sports redderr.
Regulators across the country - including in states where mobile sports redderr is also legal - have concluded our games perfectly fit within the legal definition of fantasy sports. This includes determinations in Arizona, Colorado, and Indiana, where the same regulators oversee both fantasy and redderr, that our products are fantasy contests. Just this year, the North Carolina Legislature reaffirmed that Pick'em is a fantasy contest, not sports redderr. And the Alabama Attorney General, who regulates fantasy sports in a state that is notoriously adverse to gambling, agreed with us that single-player fantasy contests are legal under the state's fantasy sports law. Indeed, based on ongoing discussions with regulators, we anticipate adding new states for Pick'em contests in the coming months. This is in addition to the fact that we have licenses (and in many states, have had several annual renewals) in every state that requires one to operate our contests (16 in total), pursuant to licensing processes that specifically consider the types of contests we offer.
FanDuel and DraftKings know their legal argument is wrong. I built the first single-player Pick'em fantasy game at StarSteet in 2012, a game we later sold to DraftKings. Until recently, DraftKings and FanDuel shared lobbyists and lawyers in a coalition with one of the longest-running Pick'em fantasy operators. It wasn't a problem then because they didn't perceive that partner as a competitive threat.
This isn't a good-faith fight on the legal merits; it's a convenient mask for a pure anti- competitive effort.
This Fight Matters for American Sports Fans
DraftKings and FanDuel want to prevent you from playing the fantasy sports you love. They want to quash competition in fantasy and stop innovation, and potential rivals, in sports redderr. Unable to innovate with new sports games, FanDuel and DraftKings are trying to ensure fantasy sports are limited to a very narrow category of games. They want American sports fans to have only one outlet for sports games: the tired old casino sportsbook.
Having already abandoned fantasy sports for sports redderr, FanDuel and DraftKings aren't hiding their next move: abandoning sports redderr for the huge potential online casino market. Put simply, they see sports redderr as a stepping stone to having digital slot machines in every American's pocket. Where they once may have cared about sports and sports fans, their recent efforts show that they have long-since turned their attention solely to the bottom line.
Competition is the engine of innovation. You should not have to be stuck with the old fantasy sports games that FanDuel and DraftKings offer where the top few percent win a large majority of the money or old-fashioned casino sportsbooks. You should have the choice to play sports games that are fun and innovative. And you shouldn't be limited to only the sports games offered by industry giants that are already focused on online casino gaming.
We've shown how innovation can bring about new games that our fans love, and ways for our players to increase their enjoyment of sports. We will continue to innovate, with many new games for fans in our future. And we will win this fight, especially with your help, to ensure the future of sports games in America serve the fans and not only the interests of big tech monopolies.
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