Shergul Arshad says he saw all the fantasy sports scrutiny coming.
Arshad is the CEO and founder of the daily fantasy soccer website Mondogoal. The site is legally incorporated in the Isle of Man and has an office and two directors there, but Arshad lives in Lexington and works out of a company office in Wellesley.
He’s watched on as competitors, especially Boston-based DraftKings and New York-based FanDuel, have found themselves in the middle of an autumn regulatory storm. Arshad said the ambiguities in state and federal gambling laws always made it likely the games would see some pushback in the U.S.
“At some point, there was going to be something drastic,’’ Arshad said.
You probably haven’t heard of Mondogoal. Unlike DraftKings and FanDuel, it hasn’t bombarded your TV with commercials. Offering only soccer contests, it’s out of the league of industry leaders. Right now, it’s ranked the 15th most popular daily fantasy sports site, according to the website Legal Sports Report.
But Mondogoal has been largely insulated from the industry’s issues in the U.S., mainly because the U.S. isn’t its focus. While its games can be played here, Mondogoal’s ambitions were global when it launched ahead of the 2014 World Cup: The company sought to score big in soccer-frenzied Europe, starting with the United Kingdom. Arshad said Mondogoal derives 90 percent of its revenue from across the pond, where it has partnered with major soccer clubs—and where it operates as a licensed gambling company.
The latest industry flashpoint in the U.S. came last week. New York Attorney General Eric Schneiderman said DraftKings and FanDuel are illegal gambling operations and ordered them to stop accepting entries from state residents. The two companies have lawyered up and filed suit to fight the order. DraftKings heightened its defiance late last week by saying it would “continue to operate’’ in New York in the meantime, and doubled down on that position even after both companies failed on Monday to obtain temporary restraining orders from Schneiderman.
Arshad struck a different tune in response, quickly tweeting that Mondogoal could no longer be played in New York.
His company could stomach it, because New York is a small side market for Mondogoal. That’s not the case for DraftKings or FanDuel, for whom New York City is key.
But Arshad said the move to flee New York is also reflective of a different perspective, gained from operating in Europe, where sports betting is legal and regulated. Mondogoal has obtained gambling licenses in the U.K., Ireland, and the Isle of Man, and expects to move in to Italy soon.
Losing New York is “… a bad blow but [that] is why we chose the world’s biggest sport in a regulated and licensed country as the focus,’’ he said. “Left nothing to chance.’’
Isle of Man is a “friendly’’ market for gambling companies, according to Chris Grove, the editor of Legal Sports Report.
“Isle of Man is a business-friendly jurisdiction and home to several major online gambling companies, including PokerStars,’’ he said in an email. “So it’s certainly not unusual that a company with a background in the European online gambling market would choose to operate out of that jurisdiction.’’
Aside from the licensed European markets, Mondogoal can be played from 43 U.S. states that have not explicitly banned the games, as well as most of Canada and Brazil, which Arshad said have similar legal ambiguities. But it has marketed itself almost entirely in the countries where its licenses ensure its legality, he said.
“We’ve operated a very cautious business that is focused on the white market rather than gray,’’ he added. “So if something turns gray, we’re going to get out.’’
Arshad said last week’s order in New York is an example of why Mondogoal focuses on its licensed markets. DraftKings and FanDuel put millions of dollars of marketing and advertising in New York, but their business in the state is now endangered.
“There’s no refund on that,’’ he said.
Mondogoal is a rarity in the industry for its focus on Europe. But the big daily fantasy companies have eyes for the continent, too. Earlier this year, DraftKings received a gambling license in the U.K., and recently opened an office there. FanDuel, which already has an office in the U.K., has a pending application for a license, according to the U.K. Gambling Commission’s website.
Arshad said he finds the “outcry and rebellion’’ from DraftKings and FanDuel in New York—where their legality was never certain—disingenuous considering their willingness to play by the rules in the U.K.
“The behemoths are slipping in gambling licenses on the side and then are shocked when [U.S. officials] call it gambling.’’
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