DraftKings Intercedes for FantasyHub and Pays Off Outstanding Player Debts
DraftKings is the second largest DFS site in the world that boasts over a million active users while FantasyHub, was a just smaller Texas based operator. Their DFS offering went offline without any public warnings on February 19, 2016; leaving thousands of players without access to their funds; more than a few hundred thousand dollars were owed to players, which raised questions of financial mismanagement.
It has been announced that stating next Thursday night, DraftKings will allow affected players to either transfer their outstanding balances to an existing DraftKings account or a new one. With immediate effect, players will be able to withdraw previously deposited funds or use it towards play on the DraftKings platform.
DraftKings co-founder and chief revenue officer Matt Kalish reaffirmed that DraftKings is not acquiring FantasyHub's website; 80% of players from FantasyHub overlap with the DraftKings demographic and they decided to step up and do the right thing by these customers.
FantasyHub has joined FantasyUp by becoming the second DFS site to close without paying players in the last three months. FantasyHub was a member of the Fantasy Sports Trade Association (FSTA), which requires members to keep player funds separate from other expenses. Ted Kasten, an FSTA board member said, “The FSTA is trying to work with states to regulate DFS so this type of situation doesn't occur in the future.”
DraftKings admitted that they have been aware of the financial mismanagement allegations against FantasyHub for a while, discussions to bail them out have been ongoing for weeks, leaving players without access to their funds very frustrated. Kalish said in a statement to players, “This news is a troubling breach of trust for you, as FantasyHub players and as members of the DFS community.” He stressed that his company has always kept customer funds separate from their operating budgets and added, “We promise to uphold these values and guarantee that FantasyHub players can engage with our site with complete confidence and security,”
Fantasyhub had also obliged to donate a fraction of their winnings to charities but left $100,000 outstanding, owed to them when they closed. The founding members of the DFS site, Andrew Busa, Steven Plappert and Chris Pierce stated in an email that they were unable to comment on the situation at the moment.