Daily fantasy sports site DraftKings, which entered the esports industry with spending spree late last year, is pulling its sponsorships from major esports organizations amid ongoing legal and financial problems.
Last year an unprecedented amount of money flowed into esports. A large part of that influx came from fantasy betting and gambling sites, and especially from traditional sports sites venturing into esports for the first time.
Last September, DraftKings sponsored major esports organizations Cloud9, Team SoloMid, Counter Logic Gaming, compLexity Gaming, mousesports, and SK Gaming. That partnership was believed to be a multi-million dollar deal brokered by sports management agency WME|IMG.
But sources close to these teams tell the Daily Dot that DraftKings has dropped sponsorship from all six of these teams. The DraftKings logo has been removed from each teams’ jerseys and websites.
In addition, DraftKings has dropped advertising campaigns for certain NFL and NBA events. The company is also cutting some of its advertising budget for television ads as well, according to sources close to the organization.
The reason for leaving esports teams behind isn’t clear. But sources suggest DraftKings has been hit with unexpected financial issues after running into legal problems in several states. Nevada, Illinois, New York, Arizona, Iowa, Louisiana, Montana, and Texas have recently ruled that daily fantasy sites are illegal gambling.
DraftKings is not the only fantasy betting site to enter the esports space last year. Startups Alphadraft, Unikrn, and Vulcun began various types of fantasy and wagering offerings specifically geared for esports last year. In September, Alphadraft was bought by Fanduel, a traditional sports daily fantasy site.
While Unikrn is still afloat, Fanduel and Vulcun have both seen layoffs recently. Alphadraft has so far not been affected, but Vulcun has made significant changes to its business model, including shuttering its paid fantasy service.
DraftKings did not respond to a request for comment by publication time.