10 Reasons Why Daily Fantasy Boom Ended Quickly
At one point in 2015, you couldn’t watch a TV show without eventually seeing a DraftKings or FanDuel commercial.
These leading daily fantasy sports (DFS) sites were out to lure everybody into their cyber dens.
This caused a quick spike in DFS activity, which reached a pinnacle when Aaron Jones won $5 million through daily fantasy football.
Fast-forward to now, though, and you rarely see DFS commercials. In fact, the activity doesn’t draw nearly the same number of casual fantasy players.
So why did the daily fantasy sports boom end so quickly? Here are 10 reasons why DFS is no longer the juggernaut that it once was.
1. DraftKings, FanDuel Stopped Shoving Ads Down Our Throats
Okay, this first one is pretty obvious. But it’s still worth mentioning that one reason why the DFS boom ended is because we aren’t being blasted with commercials for DraftKings and FanDuel.
Nigel Eccles, FanDuel’s CEO, admitted that his company realized how annoyed non-DFS players were becoming at the constant ads.
2. States Started Cracking Down
In early 2016, New York Attorney General Eric Schneiderman waged a war against DraftKings and FanDuel. In fact, he attempted to ban them, which got both sites to temporarily stop offering services to New Yorkers.
The two sides worked out their differences, but this hasn’t stopped states like Alabama, Delaware, Iowa, Montana, and Washington from offering legal resistance to DFS.
3. State Governments can Now Handle Internet Matters
Back in the mid-2000s, online poker was booming and states/the federal government seemed befuddled by what to do with it. Given that many politicians were still trying to figure out what a web browser was back in these days, online poker thrived in a gray area for a long time.
But now, state governments are well aware of how to deal with internet activities. So DFS has already begun the early stages of dealing with regulation and governmental red tape.
4. Legal Battles Have Become Costly
Battling state governments in multiple places isn’t cheap – even for the two biggest DFS sites. And DraftKings CEO Jason Robbins admitted that a sizable portion of their budget is going towards lawyers.
“[We plan] to take on some new expenses, more short-term than anything,” Robins said. “New expenses with all the things we’ve been doing on the legislative front.”
5. Heavy Advertising Campaigns Were Costly
Obviously all of the TV, radio, and internet ads that DFS sites ran netted lots of new customers. But as the Consumerist points out, the campaigns were a little too costly.
For every new real-money customer that DFS sites attracted, they spent an average of $150 to recruit them.
6. Joe Sixpack Has Realized that Average Fans Don’t Win
Many of DraftKings and FanDuel’s 2015 ads pushed the idea that average fans could hop on these sites and win quick cash.
But as comedian John Oliver points out in this hilarious segment (starts at 15:20), the pros have the game well mapped out.
7. The Pros Clean Up
Continuing on the last point, the top DFS pros don’t just win…they dominate.
It quickly became big news that just over 1% of the daily fantasy sports population was winning over 90% of the profits. This obviously isn’t very motivating when you’re in the other 99%.
8. DFS Sites Don’t have “Cash Games”
While daily fantasy sports sites try to push the single-table games as “cash games,” these aren’t the same as online poker cash games.
In the latter, you sit at a table and play hand after hand for hours. This is one reason why online poker sites made so much money in the mid and late 2000s, with people playing thousands of hands through these cash games.
DFS’ version of cash games is creating a lineup, then using it throughout multiple tournaments and single-table games. This is a great way for pros to maximize their profits, but it just hasn’t caught on with the average player, thus lowering DFS operator profits.
9. Expansion Outside the US Isn’t Taking Off
While America is still a lucrative DFS market, it’s hard to grow when you can’t reach international markets.
DraftKings and FanDuel have tried branching out into the UK, but this hasn’t gone well so far.
10. Scandals Have Already Surfaced
The fear surrounding online gambling has always been if you’re being given a fair shake. And this has been called into question several times with DFS, including one scandal where a DraftKings employee made $350,000.
DraftKings worker Ethan Haskell wasn’t playing at his own site because he’s not allowed. But he was playing at rival FanDuel and, in addition to the $350k prize, Haskell killed it in other games too.
The fact that he works for another major DFS company had many questioning whether Haskell was getting exclusive information from his employer, then using it to win big at FanDuel.
