The Gambling Law of Connecticut Places Both Fanduel and Draftkings in Duopoly
Yahoo announced its withdrawal from the Connecticut fantasy sports market on Thursday in reaction to the state’s new law requiring any sports betting or fantasy sports operator to first secure an arrangement with either the state lottery or any one of the state’s sanctioned Native tribes.
Connecticut gave DraftKings and FanDuel special authorization to operate their fantasy sports and sports betting operations, respectively, after the companies reached agreements with the Mashantucket Pequot Tribal Nation and the Mohegan Tribe.
Yahoo’s exit from Connecticut leaves customers in the state with only two viable alternatives for daily fantasy sports: DraftKings and FanDuel—a conclusion that should not be viewed favorably by proponents of free markets. However, it’s safe to assume that no full-season, pay-to-play fantasy sports firms will open in Connecticut.
Yahoo’s ability to compete in delivering pay-for-play fantasy sports games on a national basis has been harmed by the departure of a rival from the Connecticut market. This is due to the fact that, unlike sports betting, fantasy sports markets are usually national in nature.
Companies with a nationwide reach are more likely to thrive since DFS participants usually look for tournaments with the greatest potential prize pool.
The departure of Yahoo from Connecticut is just the latest development making it even more challenging for DFS companies to compete with the DraftKings-FanDuel duo.
However, despite grandfathering in DraftKings, FanDuel, and Yahoo over six years ago, the New York State Gaming Commission has yet to open fantasy sports licensing to smaller firms and those who did not enter the state first.
The New York State Gaming Commission’s regulation impacts full-season fantasy sports contests as well as daily fantasy sports tournaments, similar to Connecticut’s legislation.