July 12, 2024

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DraftKings Is Looking To Offload Vegas Sports Network

2 min read

DraftKings acquired Vegas Sports Information Network, also known as VSiN, back in March 2021 for $70 million. According to reports that have surfaced, the company is looking to offload the sports betting radio network to a potential buyer. One of the most anticipated buyers is Brent Musburger, the founder of VSiN.

Neither side has officially confirmed the news, and most of it is just the reports talking. What makes this speculation worse is that it highlights the lack of synergy between media and sports betting. It goes on to establish that gaming companies face difficulties when it comes to making money from their media ventures.

DraftKings had acquired the network for $70 million in anticipation of dominating the market, which was projected to reach $30 billion by the end of the decade, that is, in 2030. Suffice it to say, the move was considered strategic at that time but has now booked the opposite of a healthy bottom line.

If it is sold, then the industry can expect changes in the dynamics between DraftKings and Barstool. A marketing agreement brought the latter on board. Offloading VSiN would bring a lot of changes to the marketing affiliations of the network. VSiN is expected to go strong even as a standalone company since it has earned strong brand recognition and Musburger is a well-known name in the industry.

The development comes while DraftKings faces a lawsuit from a buyer, Justin Dufoe. They have filed a case against DraftKings on behalf of NFT owners. The argument is that the sports-themed NFTs offered by DraftKings were investment contracts and, therefore, should be categorized as securities according to the Howey Test. NFTs, offered on the Polygon blockchain, would see a lot of change if they were indeed classified as securities.

The court has found validity in the argument and has ruled that NFTs from DraftKings involve an investment of money pooled into a common enterprise with associated risks and gains. The value of NFT is reportedly linked to the performance of DraftKings Marketplace. This factor plays a crucial role in taking it into the category of securities.

It is very likely that the verdict in this case may set the stage for NFTs, thereby determining if all of them are investment contracts and, hence, securities.

DraftKings is also concerned about an additional factor. The matter pertains to an employee of the organization who cooperates with a scheme that includes physical assault, extortion, and death threats. A senior-ranking DraftKings employee has been accused of these allegations by an anonymous plaintiff.

Simply put, troubles for DraftKings are far from over. Even if one of them closes their eyes, another will emerge within a few seconds. It is hard to determine what the priorities of DraftKings are, except that the company wants to shed as much conflict as possible.

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