DraftKings, FanDuel in troubled waters? DFS operators reportedly ‘short on cash’

More trouble is brewing for daily fantasy sports operators DraftKings and FanDuel as the legal and financial challenges facing the industry show no sign of letting up.

The two companies are reportedly close to a settling with New York Attorney General Eric Schneiderman over claims that they engaged in false advertising to promote their daily fantasy sports contests last year, according to the New York Times. There’s just one problem: DraftKings and FanDuel are “so short of cash.”

Sources familiar with the negotiations told the news outlet the two operators “have conceded that they are having difficulty meeting their day-to-day obligations” and had sought to pay their final settlement with Schneiderman’s office in installment. The settlement is expected to cost DraftKings and FanDuel between $8 million and $12 million in total.

The DFS operators have admitted that “they are months behind in their payments to vendors,” particularly to the public relations and lobbying firms scattered across the country that helped them persuade state legislatures to legalize daily fantasy contests.