Fantasy-sports company DraftKings Inc., which has faced a series of legal and regulatory challenges in the U.S., said it has received a license that will allow it to operate in much of the European Union, the Wall Street Journal reported.
The license from the Malta Gaming Authority gives Boston-based DraftKings the ability to offer its service in EU countries where there aren’t separate regulations governing daily fantasy sports. The company began operating last year in the U.K., which requires its own license, and it is also active in Canada.
DraftKings has its sights initially set on expanding in Germany and Malta by the end of March, said Jeffrey Haas, the company’s chief international officer. Mr. Haas said Germany has a long tradition of season-long fantasy sports, but he said there are no major daily fantasy operators in the country.
We looked at what allowed us to become successful in the U.S., and one of the key factors was that we came into a marketplace where there was already a strong culture of fantasy sports, Mr. Haas said”
More than 90% of players on DraftKings today are from the U.S. The company expects international business to represent 5% of its revenues by the end of this year, and 10% by the end of 2018.
DraftKings and its onetime rival, FanDuel, which it agreed to merge with in November, run daily or weekly contests that allow players to assemble virtual teams of professional athletes and compete for prizes based on those athletes’ real-world performances.
The companies were among the most aggressive television advertisers in the country in advance of the 2015 N.F.L. season, with DraftKings ranking as the nation’s top TV advertiser in September 2015. That came thanks to backing from major sports leagues and media companies: DraftKings has investments from Major League Baseball, the National Hockey League and 21st Century Fox Inc. (News Corp, parent company of The Wall Street Journal, shares common ownership with 21st Century Fox.)
That advertising blitz helped lead to regulatory and legal probes by several state attorneys general, including in Texas and New York, over whether the sites violated state gambling laws. Both companies agreed to pay $6 million in October to settle a lawsuit over their advertising practices brought by New York Attorney General Eric Schneiderman.
So far 10 states, including New York and Colorado, have laws recognizing the legality of such fantasy sports sites”
The companies currently have registered lobbyists in more than 30 states, according to an analysis from GamblingCompliance Research Services.
Mr. Haas said the expansion in Europe is unrelated to the U.S. regulatory challenges, and that the company applied for the European license in spring 2015, before any issues arose.
“We’re running these strategies in parallel,” he said. “We believe the future of our business in the U.S. is going to be robust.”
DraftKings has long argued that daily fantasy sports isn’t gambling, but rather a game of skill. It has a gambling license allowing it to operate in the U.K., which raised some eyebrows last year when the company was simultaneously telling state authorities it was not a gambling operation. The license in Malta is under a newly crafted regime known as a skill games license.
In targeting Germany, the company is betting on the enormous popularity of soccer in Europe. Mr. Haas said he expects soccer to eventually surpass American football and basketball as the most popular sport on the platform. “It’s just a matter of time,” he said.