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DraftKings’ value has tumbled by 60%, Fox says

On Tuesday, Yahoo Finance reported that ESPN has ended its exclusive advertising agreement with DraftKings, in yet another major blow to the daily fantasy sports world.

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Fox, who invested $160 million in DraftKings around the same time ESPN declined to, marked down the value of that investment to $65 million in a Securities and Exchange Commission filing Monday, a loss of 60 percent. New York Attorney General Eric Schneiderman has pursued the two companies with particular vigor.

FanDuel, a fantasy sports website, is laying off dozens of employees in Maitland amid challenges from numerous states and politicians over the legality of daily fantasy sports websites.

In October, the Nevada Gaming Control Board and the state’s attorney general determined that daily fantasy sites should be defined as sports gambling and need a license to operate in that state.

Although Fox didn’t elaborate further on their reasoning, it’s safe to assume that the markdown is related to all of the daily fantasy sports regulatory drama that has been occurring over the past few months. FanDuel and DraftKings claim that their games, unlike poker, are games of skill and should not be classified as gambling.

Back in July it was reported that DraftKings committed to $250 million in ad spend on ESPN over two years. Data leaks called the integrity of the games into question and invited intense scrutiny, notably from state governments (notably in NY and Massachusetts) and federal investigators asserting that DFS was a form of gambling and should be banned in their respective regions.

Payment processor Vantiv announced earlier this month that it would stop accepting daily fantasy sports business at the end of the month.

DraftKings did not have an immediate comment on the action by Fox.

Citigroup and Bank of America say they’re blocking their NY customers from playing the contests.

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Since then, it’s been an expensive fight for industry leaders DraftKings and FanDuel, trying to convince players and legal challengers of their legitimacy. Many of these bills, with support from the industry, would allow daily fantasy sports to continue, albeit with new oversight. DraftKings’ implied value climbed substantially in that time: the first round of investment, worth about $300 million, valued the company at about $1.2 billion.

Fox cuts value of DraftKings stake by 60 percent