DraftKings covers outstanding debts and donations of FantasyHub

Daily fantasy leader DraftKings is stepping up for the good of the industry and will be covering hundreds of thousands of dollars in unpaid player balances and unfulfilled charitable donations from shuttered daily fantasy site FantasyHub.

FantasyHub, a smaller DFS site based in Austin, Texas, ceased operations Feb. 19, leaving thousands of players without access to their funds and failing to make donations they had promised players. The site advertised that a percentage of deposits and winnings would be donated to charities, including some affiliated with professional athletes like former NFL quarterback Kurt Warner and Heisman Trophy winner Bo Jackson. Some charities did receive donations from the company, but others did not.

According to DraftKings, a few hundred thousand dollars were owed to players and more than $100,000 was owed to charities by FantasyHub. DraftKings is not acquiring FantasyHub's website, and no FantasyHub employee will be joining DraftKings.

"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."

Beginning Thursday night, a page on DraftKings' website will allow players impacted by the FantasyHub closure to either migrate their balance to an existing DraftKings account or create a new one.

"At that point, they'll immediately be able to withdraw the cash that they had been waiting for," Kalish said. "There's not a requirement on their end. They can very quickly put a withdrawal in and get their funds out."

FantasyHub was founded by three young entrepreneurs, Andrew Busa, Steven Plappert and Chris Pierce. In an email, Busa said they were not able to comment at this time.

With the industry under pressure from lawmakers and politicians, FantasyHub was the second daily fantasy site to close without paying players in the last three months, joining FantasyUp, which was also bailed by another company, the iTEAM Network.

Discussions to bail out FantasyHub were ongoing for weeks. Players without access to their funds became increasingly frustrated, and at least five contacted Texas Attorney General Ken Paxton's office, which would not confirm or deny that an investigation had been launched.

In January, Paxton issued an opinion that daily fantasy sports violated state gambling laws and is now involved in a legal battle with DraftKings.

FantasyHub was a member of the Fantasy Sports Trade Association, which requires members to keep player funds segregated from business operating funds.

"The FSTA is trying to work with states to regulate DFS so this type of situation doesn't occur in the future," said Ted Kasten, an FSTA board member, who operates DraftAnalyzer.com and was involved in the discussions between DraftKings and FantasyHub.