Amid ongoing turmoil for the once-booming daily fantasy sports industry, one of the industry’s largest operators outside of FanDuel and DraftKings has declared bankruptcy after apparently using player funds for operations.
Orange County-based daily fantasy operator Fantasy Aces filed for Chapter 7 bankruptcy in the Central District of California on Tuesday, just a week after the company publicly announced it was being acquired by a competing daily fantasy operator, Fantasy Draft. That deal fell through earlier this week, due to “issues identified during our due diligence,” the company account tweeted Monday.
The next day, Fantasy Aces officially declared bankruptcy, sending shockwaves through the industry and leaving customers unable to access or withdraw money from their accounts. On Fantasy Aces’ site, a message suggests only that “an update (is) coming shortly, please stand by.”
On Wednesday, Fantasy Aces sent an email to its users to inform them the site was “temporarily shuttered” and that “all accounts are on hold.”
“After spending over a year attempting to secure long-term capital, including recent negotiations with two notable companies which subsequently failed to close, we are left with an unresolvable financial burden and have spent every waking minute attempting to find a solution for our players most importantly,” the email read. “We have unfortunately exhausted every possible financial option with no success. We fought as hard as we could, in the end without a major infusion or acquisition we just were not able to make it.”
Under Chapter 7 bankruptcy, the company’s non-exempt assets will be liquidated to pay off creditors. According to a copy of Fantasy Aces’ filing, the company claims $1.8 million in total assets, based on the size of its user base, site data, and mobile app, among other things. Fantasy Aces also claims $2.96 million in liabilities.
One Bank of America account listed in the filing as “Players Account” contains $2,419.86, while another Paypal account listed with the same name contains only $791.43. Three Bank of America accounts, each listed as a “Contest Account,” add up to just $209.65.
Under creditors owed, the filing suggests that “Various User Accounts” are Betsmove owed $1.3 million.
Fantasy Aces, which is based in Aliso Viejo, was launched on opening day of baseball season in 2013 by brothers Trent and Bryan Frisina. The site found its niche in the daily fantasy industry by offering live events for DFS patrons, and until recently, had established itself as one of the many jockeying for third- and fourth-place in market share, behind soon-to-merge daily fantasy behemoths DraftKings and FanDuel.
Fantasy Aces is not the first operator in the daily fantasy sports industry to find itself unable to repay its users. In 2016 alone, FantasyHub, a small operator that allowed users to donate winnings to charities, was bailed out by DraftKings, which agreed to pay off its outstanding debts. FantasyUp, another operator, also had its player balances paid by fellow DFS operator iTeam Network.
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