Dive Brief:

• Google is preparing to allow advertisements for fantasy sports services like DraftKings and FanDuel, lifting a longtime ban, Adweek reported. The search giant will make the change in select states by the end of this month, letting fantasy sports services buy media placements through Google Ads and DV360.
• Google updated its advertising policies to reflect the change, stating that fantasy sports advertisers must meet minimum creative standards and hold state licenses, where required, to promote their services. Advertisers that operate in a state where no license is needed must hold a license in at least one other state. Google also requires gambling companies to apply for certification before placing ads.
• Prior to the change, Google was the only major digital network that didn't allow fantasy sports companies to advertise, FanDuel CMO Mike Raffensperger told Adweek. The only way to advertise on Google's networks was by promoting "free-to-play" services that don't offer a cash payout, the executive said.

Dive Insight:

Google's policy change to allow fantasy sports services to advertise will give companies like DraftKings and FanDuel a chance to reach high-intent audiences on Google Search, YouTube and other sites that accept fantasy sports ads. The daily fantasy sports (DFS) platforms were already expected to continue ramping up ad spending this year in response to more comprehensive legalization.

Whether Google's policy change will be a significant windfall for the company is debatable, considering that DraftKings and FanDuel have become more selective about how they promote their services. Several years ago, the companies were among the biggest media spenders in the U.S. That marketing push helped to drive growth — DraftKings boasts 11 million customers on file, while FanDuel has more than 8.5 million, per CNBC.

Heightened regulatory scrutiny led the DFS companies to curtail their marketing spending in 2016. Since then, several legal developments have helped to clarify how they can operate.

A 2018 U.S. Supreme Court ruling paved the way for legalized sports betting, leading one analyst to forecast that sports gambling would drive $7 billion in media spending this year. However, DFS companies were still at the center of discussions about whether their services were a form of gambling that needed to be regulated. DraftKings and FanDuel have argued that they provide games of skill, not gambling.

In response to the muddled regulatory atmosphere, DraftKings and FanDuel have restricted people from playing in certain states. As of July, the companies blocked players in Arizona, Alabama, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada and Washington. Iowa and Alabama legalized DFS, but DFS operators haven't started providing services in the states yet, according to Legal Sports Report.

Google's decision to allow DFS ads indicates that the search giant is more comfortable with the industry, and that it has the technology to ensure that ads can be targeted to reach adult audiences in states where DFS services are legal.