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FanDuel, DraftKings Bet on Big Law Amid Sports Gambling Surge

Feb. 24, 2021, 10:31 AM

FanDuel Inc. and DraftKings Inc., two arch rivals in daily fantasy sports, are turning to large law firms to bolster in-house legal and compliance staffs as they embrace regulatory changes paving the way for the expansion of their businesses.

FanDuel elevated Carolyn Renzin to chief risk and compliance officer in January, a little more than a year after the former assistant general counsel at JPMorgan Chase & Co. joined the company as vice president of legal, regulatory, and compliance.

DraftKings announced Feb. 16 its promotion of vice president of compliance and risk Jennifer Aguiar to chief compliance officer. Aguiar, who is not a lawyer, has previously held compliance roles at the LendingClub Corp., Citizens Financial Group Inc., and Capital One Financial Corp.

The dueling appointments come after Louisiana, Maryland, and South Dakota passed ballot initiatives late last year to permit online sports betting, measures that made the practice legal in nearly half of U.S. states.

“You’re going to see continued expansion in the legalization of online gaming and online sports betting,” FanDuel CEO Matthew King told Bloomberg TV on Feb. 19. “That’s going to be great for our business.”

FanDuel confirmed Renzin’s new C-suite role, which had not been publicly disclosed.

“Her appointment and the recent investments made within our legal team reflect our continued commitment to compliance, regulatory affairs, and responsible gambling initiatives,” said FanDuel spokesman Chris Jones.

Renzin oversees all risk and compliance programs for the company.

Prior to joining FanDuel in late 2019, she spent a six years at JPMorgan, which hired her in 2013 after she served as a managing director at Guidepost Solutions LLC and partner at Stillman & Friedman, a white-collar boutique absorbed by Ballard Spahr.

FanDuel’s legal group reports to the company’s chief legal officer, Christian Genetski, a former vice chair of the internet practice at Dentons predecessor Sonnenschein Nath & Rosenthal. FanDuel hired Genetski in 2015 from the Entertainment Software Association, a trade group he had joined as legal chief in 2011.

In 2018, FanDuel was sold to Flutter Entertainment PLC, a Dublin-based gaming giant that owns the Paddy Power bookmaking brand and Betfair, the world’s largest online betting exchange Betfair. Wilson Sonsini Goodrich & Rosati advised FanDuel’s former owners, Fastball Holdings LLC, on that deal and their recent exit from the company.

Wachtell, Lipton, Rosen & Katz represented Flutter in December when it took nearly full control of FanDuel by paying almost $4.2 billion to acquire a 37.2% stake in the New York-based company held by Fastball that it didn’t already own.

Legal Changes

Sports betting has rebounded as states struggling with financial shortfalls due to the coronavirus pandemic look to replenish their coffers with taxes on the wagers.

New Jersey, whose landmark sports betting case before the U.S. Supreme Court in 2018 helped digital gaming companies expand their operations, has reaped the benefits from state and local betting taxes.

King expects more U.S. states to follow New Jersey’s lead.

“It raises taxes for the state,” said King in a Bloomberg TV interview when asked about daily fantasy sports, in which some participants can win big payouts. “In the case of sports betting in particular, it puts a black market out of business, so you end up with greater levels of consumer protection.”

FanDuel’s bid to comply with new regulations and potentially put bookies out of business has kept it busy in the market for legal and compliance professionals.

Genetski’s legal team recently recruited Paul, Weiss, Rifkind, Wharton & Garrison associate Molly Stevens as counsel for legal and business affairs and Hughes Hubbard & Reed associate Danielle Rosen in a similar role.

Renzin’s compliance group hired ex-Sidley Austin associate Jonathan Fishner last year as a director of legal, compliance, and risk and added Elizabeth Barbosa, a non-lawyer compliance executive at JPMorgan and Wells Fargo & Co., as director of risk.

In late January, FanDuel paid $30,000 to Skadden, Arps, Slate, Meagher & Flom after retaining the firm to lobby the Treasury Department and Internal Revenue Service on an “industry issue resolution program,” according to U.S. Senate filings.

Skadden received the same amount from DraftKings, which saw a proposed merger with FanDuel collapse in 2017 due to regulatory opposition. The IRS has issued guidance that could cost both companies millions of dollars in excise taxes.

FanDuel employs several former Skadden lawyers, including director of litigation Robert Dunn and legal and regulatory affairs experts Joshua Mehta and Alex Smith.

Big Business

A spokeswoman for DraftKings, which went public in 2020, acknowledged that the Boston-based company added at least a half-dozen lawyers last year and filled several compliance, licensing, and regulatory affairs positions.

Within the past two months DraftKings has hired Goodwin Procter associate Kyra Ayo Caros as a senior corporate counsel and Hunton Andrews Kurth associate Anna Rothschild as a litigation attorney. Both are based in Boston.

DraftKings CEO Jason Robins, who recently spoke with Bloomberg TV about the U.S. sports betting landscape, is a younger cousin of FisherBroyles intellectual property partner Lawrence Robins. He has handled trademark work for DraftKings.

Skadden advised sports betting technology supplier SBTech Global Ltd. last year on a three-way merger with blank-check company Diamond Eagle Acquisition Corp. and DraftKings that took the latter public during a pandemic.

Sullivan & Cromwell counseled DraftKings and Winston & Strawn and Paul Hastings took the lead for Diamond Eagle on the $3.3 billion deal that closed in April and led to DraftKings’ initial public offering.

In subsequent months, Greenberg Traurig and Sullivan & Cromwell counseled DraftKings on a share sale that generated $625,000 in legal fees and expenses, per securities filings. Basketball great Michael Jordan also received an equity interest in DraftKings after agreeing to be a special adviser to the company’s board of directors.

R. Stanton Dodge, DraftKings’ chief legal officer, owns more than $14.5 million in company stock, according to Bloomberg data. Securities filings show that Dodge, hired in 2017, sold off nearly $15.5 million in stock after DraftKings went public.

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com
John Hughes in Washington at jhughes@bloombergindustry.com

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