Daily fantasy sports site FantasyUp has ceased operations, having apparently squandered player funds in an attempt to stay afloat over the last six months.
Both the website and the app went dark Thursday, and players were reportedly sent the following email, stating that balances would not be paid out.
For the past few years, FantasyUp has been providing daily fantasy sports (DFS) contests with industry leading promotions. The Company essentially paid players to play on its platform with the expectation that industry would continue to expand and a financing deal would allow for us to further our growth within the industry.
Such a deal presented itself to FantasyUp months ago, before being delayed for investor personal issues. Over the following weeks, the industry saw numerous legal issues arise, increasing the cost of doing business and the decreasing the ability to raise funds.
FantasyUp no longer has the capital to fund even minimal operations. The owners and investors in FantasyUp continued to fund the business while waiting for the financing deal, but after numerous conversations with advisors, experts, and past/potential investors, the Members of the LLC have concluded that they have no choice but to shut down the business and dissolve.
As of January 14th, 2016, the Company has ceased operations and legally dissolved the business. Our sincere apologies that we cannot process withdrawals, as the Company does not have the funds needed to process the withdrawals to all customers.
It was our privilege to serve you for the past few years.
The FantasyUp Team
FantasyUp’s payout problems date back to the summer, when it blamed players’ inability to access funds on a stalled financing deal.
“Frankly, we are skipping many steps that are seen by most startups (even FanDuel and DraftKings) in terms of financing,” a site rep told DailyFantasyTalk at the time. “This will help FantasyUp dramatically expand its reach to places DK/FD have not been and product/game offerings unique to the available games today.”
The site continued accepting deposits with no mention of withdrawal issues, and players eventually started receiving payouts after two weeks.
But problems started cropping up again last month. At that time, players reported that payout delays were being blamed on a change in PayPal’s Acceptable Use policy. The site continued all other regular operations, including accepting deposits, until shutting down Thursday.
In one email chain obtained by DailyFantasyTalk, a FantasyUp customer support representative blamed stalled withdrawals on a software update in mid-December and tax reporting issues in early January. The player said he had not received requested withdrawals since November.
FantasyUp was launched by Dan Ziernicki in 2014, reportedly using $3.5 million he won on other DFS sites.
Though it is (was) a third-tier operator, the news that players have been stiffed is troubling for an industry fighting a widespread battle against negative public perception. Grandstanding politicians have wasted few opportunities to call daily fantasy companies crooks, and can’t be expected to discern the difference between the behavior of DraftKings and FanDuel and one of the industry’s bottom-feeders.
In other words, this is chum for a feeding frenzy.
Though no similar problems have been reported at larger sites, in an unregulated environment, players are left without assurances. The Fantasy Sports Trade Association specifies its members must segregate player deposits from operating funds, but its oversight powers appear relatively weak.