The DraftKings zone at Gillette Stadium opened in 2015.

By any measure, 2015 will be remembered as the most important year to date in DraftKings’ history. Milestones of previous years were outweighed by the sheer scale of events over the past 12 months. Profits hit record levels, and advertising reached a hitherto unthinkably vast audience. Conversely, DraftKings (like the daily fantasy industry as a whole) was indelibly affected by intensified legal scrutiny. And as 2015 comes to a close, the company’s future, both in the short and long term, will be largely dictated by the storm that broke in the second half of the year.

The outset of 2015 began as previous years had for Boston-based DraftKings, with the inauguration of yet another high-profile partnership. Having secured a deal in late 2014 with UFC and its (then) star fighter, Jon Jones, it signaled the continuation of an established theme: DraftKings was on the offensive. The spread of daily fantasy had proceeded successfully into new markets throughout 2014, and MMA was only the latest in a long line of additions.

More good news followed, as the company announced record revenue from the previous year in late January. Having processed $45 million in entry fees in 2013, 2014 witnessed an explosion of growth to over $300 million. Revenue leapt from $4 million ’13 to $30 million the next year. It was an announcement meant to signal a banner year for DraftKings in 2015.

Through the opening months of the year, few signs existed forecasting the crisis that would sweep over the entire industry by year’s end, though there were a handful of tremors. Mostly, the apparently peripheral threat of legal challenges manifested in the form of high profile speakers voicing stray opinions about daily fantasy. Jeff Ma was one such personality to call it gambling while at the MIT Sloan Sports Analytics Conference:

When asked to elaborate on his classification of daily fantasy as gambling, Ma notably remarked “you’re putting money on the line to win more money. What’s that called?” And he wasn’t the only one. Former NBA commissioner David Stern also called the industry a form of gambling, though he would later walk back his declaration.

In truth, the occasional gambling labels didn’t alter DraftKings’ trajectory in the early months in 2015. The narrative remained essentially unaltered. DraftKings was growing, legitimized more and more by the primetime partnerships it cultivated, as well as the growing demographics of fans who sampled daily fantasy and liked what they found. By March, DraftKings was being tentatively identified as Boston’s next billion-dollar “unicorn” after rumors swirled about a massive new funding deal spearheaded by Disney.

Baseball season’s start in April arrived with another DraftKings victory: The company became the “official” daily fantasy game of Major League Baseball. Again, it only served to move DraftKings closer to the establishment of major sports organizations, where they had a growing list of teams and leagues who were partners (and, in some cases, investors).

The company struck another successful note when it was immortalized on the cover of Sports Illustrated as part of American Pharoah’s triple crown victory (with ads seen in the background). The story also signaled what would become a major subplot for the rest of 2015: DraftKings’ very visible advertisements:

There was a flicker of concern when Disney ended up not leading DraftKings’ funding round, particularly as a report cited worries about daily fantasy being “a little too close to gambling.” Even still, it appeared to be only a bump in the road, as ESPN (owned by Disney) ultimately inked a major advertising partnership with DraftKings.

With football season looming, DraftKings was poised for another record-breaking season. After all, NFL contests had provided a driver for growth in 2013 and 2014. DraftKings co-founder Matt Kalish smartly summarized 2015 to that point for DraftKings:

This year has seen incredible growth for us and Daily Fantasy Sports as an Industry. DFS is now a part of mainstream sports culture, and the DraftKings brand has become ubiquitous with sports.

To launch DraftKings’ football contests to truly stratospheric levels of popularity, a now-infamous advertising blitz began. Edward Norton voiced a slick new slate of commercials that soon became as prevalent as any ad in the country.

According to stats from the week prior to the NFL season’s kickoff, no other company in the U.S. spent more on commercials than DraftKings. And the number of ads the company ran dwarfed the likes of AT&T, Warner Bros. and Geico. It was a crowning achievement for a company less than five years old.

Yet in this moment of victory were the first genuine warning signs for DraftKings. Digiday illustrated the backlash against what many considered to be over-advertising, as 75-percent of those polled reacted negatively to the commercials. Regardless of opinion, it was clear that the sports world took notice of daily fantasy’s advertising inundation:

And it wasn’t merely the casual football fan whose attention DraftKings acquired, as the eyes of lawmakers and regulators also began to fall on daily fantasy’s mostly unchallenged legal claims.

In retrospect, the defining story of daily fantasy in 2015 broke because of a seemingly innocuous tweet from DraftKings that mistakenly revealed too much. It sounds obscure, but the mishap signaled a scandal that was ultimately more notable for the legal scrutiny it triggered and not “leaked data” itself.

Whether DraftKings employee Ethan Haskell actually used proprietary information to help win $250,000 on FanDuel that weekend or not (he was officially cleared by a third-party investigation) was quickly rendered all but irrelevant. Instead, the scandal caused high profile questions to be asked of DraftKings, FanDuel and all of daily fantasy. The murky nature of daily fantasy employees playing on each other’s sites (and the allegations that they had access to insider information) jarred legal authorities into gear.

Whether regulators had been eyeing them beforehand or not, the fact is that the legal dominoes began to fall after Haskell’s data leak. ESPN briefly pulled DraftKings advertising as it awkwardly investigated daily fantasy while simultaneously running segments sponsored by it.

And alarm bells began to ring out, with state attorneys general announcing various investigations. DraftKings notably responded to the crisis by initially swatting it aside, posting record entry numbers in NFL week five.

But the daily fantasy industry couldn’t escape the fallout, as a prominent U.S. attorney (who had played an instrumental role in online poker’s downfall) announced an investigation.

Speculation began as to how DraftKings and its daily fantasy counterparts would be regulated, and questions over whether it was gambling or not began to take root. The topic became such a point of interest that it was even broached during a Republican presidential primary debate.

New York, with attorney general Eric Schneiderman the protagonist, quickly moved to the forefront of the legal battle. With licensing restrictions imposed in Nevada (effectively curtailing DraftKings’ presence in the state), New York’s attorney general attempted to block daily fantasy in his state, calling it illegal gambling. A protracted legal battle began, as DraftKings hired renowned attorney David Boies to make its case. The fight for survival in New York’s market will be a centerstage issue in 2016.

In Massachusetts, Schneiderman’s counterpart, Maura Healey, deftly introduced a series of regulations that allowed DraftKings and its competitors to continue in the state under certain conditions.

And as the year draws to a close, legal battles loom in many other states, including the recent news from Illinois, where daily fantasy faces a decisive court battle in June of 2016. Also, Florida has convened a federal grand jury. Numerous lawsuits have also been filed.

Still, the latter half of the year wasn’t without a degree of good news for DraftKings. The company’s NBA contests experienced a welcome growth in popularity, and though the anticipated United Kingdom launch was delayed, it promises to be a boon for user numbers in the new year.

What began as a year of seemingly unlimited potential for DraftKings ends on unfamiliar ground. Where the two proceeding years promised only future growth, the company (and industry altogether) have seen hitherto unchecked growth threatened by concerns over legality. And unfortunately for DraftKings, many of the legal fights it’s now immersed in won’t be resolved anytime soon. Added to that are concerns of additional challenges from regulators in other states (with the threat of federal action looming all the while).

DraftKings has survived 2015 in what remains an advantageous position (given that its many partnerships with leagues and teams are overwhelmingly still intact). That said, the passing year for DraftKings and daily fantasy will forever be defined by the crisis that now envelopes it.

Image via DraftKings

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