FanDuel Could Possibly Be Close To Financial Collapse
The daily fantasy sports industry is the last few years has seen major upheavals as the main players like FanDuel and DraftKings have been forced to fight long and expensive legal battles against legislators looking to shutdown their activities. The astronomical amounts the DFS powerhouses have spent in the previous years with marketing and sponsorships were based on the notion that their growth bubble would go unhindered as it was always assumed that they are a game of skill and not chance like gambling.
This however came crashing down led by the like of NY Attorney General Eric Schneiderman who was seen as one of the major reasons DraftKings and FanDuel went into combat mode and almost were brought down.
The latest information been released by DFS giant FanDuel has set off alarms as it shows that they could be close to going bust. A report from Insider.co.uk shows a reports from Auditors Deloitte where FanDuel recorded a $186m pre- tax loss for the six months to December 2015. This is alarming as it could mean that FanDuel do not have enough cash to bridge the gap as they only have $19.5m cash on the balance sheet.
FanDuel’s massive legal bill that was required to fend off regulators has yet to be recovered. The stop and go policy of FanDuel in various states has disrupted the flow of cash. This was confirmed by data filed with UK’s Company House which showed revenues for the final six months in 2015 was at $54.4m which was down from $87.7m in the previous 18 month period.
In the same period FanDuel had over $336.3 m in administrative expenses with gross profits only amounting $49,8m.
It is not entirely clear as to the current financial status of FanDuel’s data has not yet been released for 2016 but unless they do serious reduction on expenditure and other cost cutting measures, there is the real possibility that this DFS giant could collapse.