The two leading Daily Fantasy Sports companies are about to exit the Ontario market, primarily because the law associated with opening up Canada’s most populous province to internet gambling, including Ontario sports betting and online casino games, also requires that all DFS contestants be within the province.
The development restricts the total universe of eligible daily fantasy players to such a degree that it makes offering the contests far less feasible for the daily fantasy operators.
As a result, FanDuel and DraftKings — considered the industry leaders in daily fantasy sports— while planning to participate in the far more lucrative business of online gambling in Ontario (which launches on April 4) are also shutting down their DFS operations in the province.
As a peer-to-peer contest, daily fantasy, much like poker, is reliant on a concept known as “liquidity,” or simply the number of people who want to play in the contests. The greater the liquidity, the more different games the operator can offer at various price points. Also importantly, greater liquidity allows operators to offer larger prize pools, which is key in attracting in players.
DFS Players Must Be in Province
The new gambling laws that allow for online sports betting and Ontario online casinos also now requires that all DFS players be within the province, thus eliminating players from the rest of the country for practical purposes unless they are physically located within Ontario.
While Ontario is Canada’s most populous province with more than 14.6 million people, the rest of Canada represents another 23.4 million people.
Another feature of new online gaming laws that may be more influential in driving out smaller DFS companies are the Alcohol and Gaming Commission of Ontario’s registration fee of $100,000, plus a 25% tax on revenue.
To be clear, the gaming commission is not banning DFS, but its rules make it unlikely that very many companies will want to offer the contests as a matter of business, whether the concern is reduced liquidity or higher costs.
A fantasy sports group, the Fantasy Sports & Gaming Association, said that while it “welcomes the regulation of single event sports wagering in Ontario, the regulations have unfortunately made operating paid fantasy sports contests in the province impossible for almost every operator.”
FanDuel DFS Out on April 1
FanDuel said that it will shut down DFS on April 1, calling it a business decision. A FanDuel representative said that its bigger, popular contests, such as ones that offer million-dollar prizes, just wouldn’t be feasible. In the end, the DFS product just wouldn’t be the same that FanDuel customers have come to expect.
When competitive and regulated market launches in Ontario on April 4, FanDuel Sportsbook Ontario is expected to be one of the leading sportsbook and online casino operators.
In a statement, DraftKings said its DFS customers can continue playing daily fantasy contests for the time being but that DraftKings Sportsbook Ontario plans to enter the regulated sports betting and iGaming market in the near future.
“Upon our sports betting and iGaming launch, customers physically located in Ontario will not be eligible to play in paid or free Daily Fantasy Sports contests,” DraftKings said. “However, customers can continue to play on DraftKings as permissible when located in other Canadian provinces or U.S. states.”
Much the same is true for FanDuel customers. FanDuel’s players can keep their accounts active and use their funds to play FanDuel contests when they’re in another province.
Seeking a Solution for DFS
The Fantasy Sports & Gaming Group is urging DFS loyalists to contact elected officials in Ontario to alter the gaming rules so that companies will find it feasible to offer the contests.
“We ask that our member companies and millions of fantasy sports enthusiasts contact their elected representatives in Ontario to let them know that their ability to play paid fantasy sports contests is in serious jeopardy,” the group said in a news release. “The FSGA will continue to work with the (Alcohol and Gaming Commission of Ontario) to find a path for our member companies to return to operating in Ontario.”