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Major League Baseball threatens to disassociate from DraftKings

As quickly as daily fantasy sports burst onto the American sports landscape, the games may be fading from prominence.

Amid legal challenges to the daily fantasy model — including bans in New York, Texas and three other states — Major League Baseball has threatened to terminate its exclusive marketing agreement with DraftKings if the company does not comply with New York law, according to the New York Times.

And now Major League Baseball has formally notified DraftKings that it might terminate its exclusive marketing agreement with the league if the company failed to comply with New York State law, according to two people with knowledge of the matter. Major League Baseball is just one of many big sports and media companies that had rushed to capitalize on surging fan interest in the fantasy industry.

The situation is deteriorating to the point that some experts wonder about the survival of the industry as it exists — whether it can outlast the very lack of regulation that allowed its untrammeled growth. “We are shocked at how quickly this has cascaded with the ongoing viability of this industry now in question,” Eilers Research, an independent firm that studies online gambling, wrote in November.

One of the most distinctive characteristics of the brief daily fantasy era was the ubiquity of DraftKings and Fan Duel ads. We saw ads at every commercial break in every NFL game. We saw ads on the homestretch of the Kentucky Derby (and on the resulting Sports Illustrated cover). And yes, we saw ads on the outfield walls of Major League stadiums. But the spots have disappeared from the air, and now they might leave baseball parks as well.

The largest hindrance to daily fantasy’s future is the building legal consensus that the games constitute gambling because they incorporate not just skill but also luck. DraftKings and Fan Duel are currently fighting New York attorney general Eric Schneiderman declaration that their games are illegal and must be shut down immediately.

As for MLB’s threat to disassociate from daily fantasy, DraftKings issued the following statement to Sports Illustrated:

“DraftKings values all of its strategic partners and is proud of its exclusive relationship with Major League Baseball,” says Jonathan Schiller, Managing Partner, Boies, Schiller & Flexner LLP. “Major League Baseball has taken no steps to terminate its relationship with DraftKings and the Commissioner has publicly stated that he is ‘quite convinced it is a game of skill, as defined by the federal statute’ and that he is ‘comfortable with the idea that it’s not gambling.’”

Every day it looks more and more like DraftKings and Fan Duel will end up not as pillars of American sports consumption but rather as footnotes in the history of fantasy sports. Of course, maybe the companies will win some key legal battles or adjust their business model and move forward fruitfully. Or maybe ten years from now someone will say to you, “Hey remember that fall when we had to sit through all those daily fantasy commercials?” and you won’t really remember what they’re talking about.

Alex Putterman

About Alex Putterman

Alex is a recent Northwestern University graduate who, in addition to covering Wildcats sports, has worked for SI.com and the Hartford Courant and also contributed to Baseball Prospectus, AOL.com and more. His interests include baseball, rap music, the criminal justice system and some other things that don't seem to go together. You can find him on Twitter @AlexPutterman.

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