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Time to regulate DFS; FantasyUp goes belly up

15 January 2016

If you had money on the daily fantasy sports (DFS) site FantasyUp, you can kiss it goodbye. According to a post from a player on the popular DFS forum RotoGrinders, the site announced via e-mail that it was shutting down operations immediately and will not refund players the balance in their accounts.

"FantasyUp no longer has the capital to fund even minimal operations," the company wrote in the e-mail. "As of January 14th, 2016, the Company has ceased operations and legally dissolved the business. Our sincere apologies that we cannot process withdrawals, as the Company does not have the funds needed to process the withdrawals to all customers."

This comes the same day that Washington State Representative Christopher Hurst compared DFS industry leaders to El Chapo.

As an unregulated gaming activity, fantasy sports operators are not required by law to segregate player funds from their operating balances. Members of the Fantasy Sports Trade Association (FSTA) are required to do so as a condition of membership, and that FantasyUp was not a member of the FSTA is revealing. However, even if it had been, there is little the FSTA could have done to ensure the funds were segregated, as the association merely recommends that "each company has an annual audit performed" rather than requiring an annual audit.

The failure of FantasyUp brings to mind the collapse of Full Tilt Poker in the wake of the Black Friday indictments on April 15, 2011. Full Tilt promised to pay players back for weeks before eventually shutting down operations when it became clear that it could not repay the balances it owed players, both in the United States and abroad. Eventually, as part of its settlement with the Department of Justice (DOJ), PokerStars bought the company and covered the balances owed to players outside the United States, while Americans had to submit claims with the DOJ to access their funds.

While it seems unlikely that the two industry giants, DraftKings and FanDuel, would repeat the same mistakes Full Tilt made, there is currently no way of knowing if player funds are segregated at either site. Both companies assert that they are, but so did Full Tilt before Black Friday.

Company statements and trade association memberships are all fine and good, but unless there is accountability and an enforcement mechanism, there's no way to know which DFS operators are making sure player funds are safe.

Meanwhile, it appears that FantasyUp players have no recourse and will be forced to eat the loss, and it's unclear if the site's founder, Dan Ziernicki, will face any legal repercussions.
Time to regulate DFS; FantasyUp goes belly up is republished from Online.CasinoCity.com.
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Best of Aaron Todd
Aaron Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.

Aaron Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.