“People still sell snake oil. They just put pictures of leaves on the bottle now.” — 8 Health Foods That Are Bad For Your Health
For the last two weeks we explored small business’ options for going public. There’s more coming about those options down the line.
This week I want to focus on two significant goings-on worth exploring, or revisiting.
Two keys to business success is to always learn from the mistakes of others, and to also stay aware of some of the opportunists in the business and financial world.
For Now, Fantasy Sites No Longer “Kings” in NY
Starting a business that involves the outcomes of sporting or chance events is extremely risky on the outset. Even if you believe you are operating within the law, visit your state attorney general’s site and see if the office has gone after similar companies. It remains to be revealed if the leaders of the fantasy sites FanDuel and DraftKings ever did that. Now they’re paying — or earning less — for it.
An injunction was issued against FanDuel and DraftKings back in the fall. They are based in the Empire State, and if you live here, you’ve probably noticed that there have been much fewer television commercials for these companies since then. That’s because all their dough has likely been tied up in litigation and preparation.
Normally I ignore fantasy leagues — except the NCAA brackets in my office that my wife is crushing — but I have to assume that the creators of these sites either:
- Didn’t read the law
- Hired counselors who didn’t read the law
- Hired counselors who read the law, but still tried to work the system
- Just generally got bad advice and were too motivated by money to care.
Any of the above answers are unacceptable. Obviously the State feels the same way. New York State Attorney General Eric Schneiderman referred to them in an official statement as “operating illegal betting websites under New York law.” Though the companies are pending appeal, they agreed to block any bets from New Yorkers. A copy of the agreement is here.
Yahoo has decided to play along as well. Schneiderman stated:
“Following [the] announcement that FanDuel and DraftKings will follow the law and stop taking bets in New York State, Yahoo has now informed my office that it will do the same.”
So what have we learned from this?
As alluring as it may be, this is not the time to start a sports fantasy league in New York or any other state that has publicly made an example of one. Yahoo was smart enough to avoid the public fate of the other sacrificial lambs.
There’s big money to be made in every state, but when it comes to gambling, just expect the house to win.
Bloodsuckers Among Us: Zika Virus Scams
Whatever the flavor or fear of the month is, you can expect some get-rich-quick company/scheme/offer to make its way in to your company’s communication circle. In this case, consider the “small bio-tech startups that can eradicate the Zika virus” but just need the funding.
There’s so much going on in the world right now and the coverage of the Zika virus seems to come and go. Sure, we’re all glad Elmo is promoting awareness, but there are some people are out there who will do anything to make a buck. This is what motivates these snake oil salesmen to wake up in the morning.
File these messages along with the ones from Nigerian princes and your long-lost friends who are stuck at an international airport and need your help.
They come in the way of spam email and random faxes. It’s easy to ignore them but if you’re not the only one in your company receiving them, you have to act in the collective best interest. A company email/memo alerting employees of these schemes takes very little time and while it may in itself get ignored, you’ve done your due diligence for them. If you’re getting swarmed with them, report them to the Securities and Exchange Commission (SEC).
Thankfully, the SEC is on to them and issued a public statement warning of the scams, pump-and-dump schemes, and companies’ false claims of being able to treat it. There are also lots of good resources on that page for how to spot scams and how to report them. We briefly covered it last Thursday, when we discussed Over The Counter Markets (OTC), because that’s where a lot of these scams originate. Publicly-available information about microcap companies of OTC Markets often is scarce, making it easier for fraudsters to spread false information.
This sort of phenomenon will never go away.
Be alert. Be aware. Be smart. Feel free to comment on either of these newsmakers or others you’d like Brinen & Associates to explore.