More states look to regulate daily fantasy

DraftKings hopes to increase its audience by "at least 100 million people" internationally. Getty Images

While the daily fantasy industry continues to push for legal clarity in the United States, its largest operator is preparing to expand its international footprint.

In the first weeks of 2017, 11 states -- Connecticut, Florida, Georgia, Hawaii, Illinois, Iowa, Nebraska, New Hampshire, New Jersey, Oregon and Washington -- have introduced legislation aimed at regulating fantasy sports. Lobbying efforts are ongoing in more than a dozen additional states. But, for now, only 21.4 percent of the U.S. population lives in a state where daily fantasy is regulated, according to a research study by industry trade publication GamblingCompliance.

Meanwhile, daily fantasy sports provider DraftKings continues to expand internationally. On Monday, the company announced that it has been granted a specialty license by the Malta Gaming Authority. The license, known as a "Controlled Skill Games License," will allow DraftKings to expand its offerings in Europe. DraftKings, which already operates in the United Kingdom under a gaming license, is now targeting Germany as its next prominent international market.

DraftKings chief international officer Jeffrey Haas says the company plans to launch in Germany and Malta in the first quarter of 2017, study the markets and eventually expand further.

"We expect to increase our addressable audience in 2017 by at least 100 million people," DraftKings chief international officer Jeffrey Haas told ESPN.

The MGA license permits DraftKings to operate in any European jurisdiction that does not otherwise regulate gaming products locally. The U.K., Italy, France and Belgium are examples of jurisdictions that regulate gaming locally.

DraftKings began operating in the UK in February 2016 and initially focused on European soccer. The company said in the first six months accepting U.K. residents, soccer was the first sport played by 93 percent of new customers. There also was a large crossover in golf in the U.K., but the customer base has gravitated to American sports bets, as well

"What we saw was that the NFL was incredibly popular, as is the NBA," Haas said. "We see that people are really playing American sports in a significant way in the U.K. on DraftKings. And, now, I would even say that American sports are driving the business for us in the U.K."

While the company expands internationally, there are still obstacles in the U.S. Daily fantasy sports is expressly legal and/or regulated in 11 states. DraftKings and FanDuel, the two leading daily fantasy operators, list Arizona, Alabama, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada, Delaware and Washington as prohibited states. DraftKings accepts entries from Texas, while FanDuel does not.

DraftKings has filed suit against Texas attorney general Ken Paxton over his opinion that daily fantasy sports violates state gambling laws. The case is ongoing. Both DraftKings and FanDuel also are in similar ongoing litigation with Illinois attorney general Lisa Madigan. There is also a large class-action lawsuit being litigated against both companies over allegations of misleading advertising, and anti-gambling group Stop Predatory Gambling is challenging the constitutionality of New York's daily fantasy law that was passed last summer.

In November, DraftKings and FanDuel announced plans to merge. The two companies are believed to represent more than 90 percent of the industry. The Federal Trade Commission is reviewing the merger, which, if approved, is expected to be finalized at the end of the year.