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With a decision on Murphy vs. NCAA imminent, MLB and the NBA have focused plenty of attention on sports betting since the onset of 2018. Recently, they’ve reportedly also begun divesting their respective equity stakes in daily fantasy sports industry heavyweights DraftKings and FanDuel.
The two developments are far from mutually exclusive.
DFS and pro sports leagues will still be connected
The two leagues have gone out of their way to put this decision in proper context. Both DFS companies issued corroborative statements in response.
The original report on the development came from Darren Rovell of ESPN via Twitter. As clarified by all parties, despite no longer having equity in either company, the leagues will remain partners with DFS’ Big Two.
NBA spokesman Mike Bass extolled the value of their relationship with FanDuel, calling them “a great partner” to the league. For its part, MLB acknowledged ongoing discussions about “potential changes” to its business dealings with DraftKings. However, their statement also noted they “look forward to continuing our valued partnership” with the current DFS industry leader.
Likewise, FanDuel and DraftKings provided official affirmation of the value of their ties to both leagues.
Change driven by looming legalized sports betting environment
So, how does the NBA and MLB’s ever-burgeoning interest in a potential legalized sports betting environment dovetail with the lowering of their respective DFS industry profiles? It’s what none of the parties are overtly saying (yet) that’s likely the biggest reason behind the change.
The most tangible explanation is embodied in DraftKings’ decision to hire a Head of Sportsbook in late February. That move is the presumed first step towards the company developing a full sports betting vertical. Its confirmed those intentions on numerous occasions recently.
Naturally, that expansion would occur only if PASPA was struck down in some form in Murphy vs. NCAA. If MLB maintained its current equity position in DraftKings, that would mean they’d eventually be part owners in a sportsbook. Such a development would be less than ideal on a couple of fronts.
To begin with, until recently, MLB essentially echoed the anti-sports gambling sentiments of the other major sports leagues. Moreover, along with the NBA, they’ve been actively lobbying for the inclusion of an integrity fee into legislation across the country. In many of those same bills, they’re also pushing to be compensated as the official provider of the game data used to grade wagers.
If they’d remained equity stakeholders in a company that appears set to eventually run its own sportsbook, MLB would be involved on both the league and operator side of the equation. That would result in bad optics on multiple levels.
Meanwhile, FanDuel has yet to make reveal any intentions of jumping into the sports betting realm. However, it’s certainly likely at some point. That’s largely due to the fact its biggest competitor is on its way to fully immersing itself in the space. Therefore, although not currently the case, were it to hang on to its equity stake in FanDuel, the NBA would likely find itself in the same position as MLB.