The question of how to measure and compare daily fantasy sports operators is less straightforward than one might think.
A number of metrics, including active player base, total prizes awarded, and total revenue, are valid starting points for the conversation. But each generate a unique, often contradictory story for market share.
The questions gets more complicated when you consider:
- DFS traffic and revenue is incredibly NFL-heavy.
- Different operators offer different sports.
- Different operators that offer the same sports may focus more or less on a given sport than competing operators.
With all that said, all data we have access to suggests that DraftKings currently holds a larger share of today’s market for daily fantasy sports than presumed leader FanDuel.
We’re looking at a mix that incorporates direct metrics (such as number of players, contests and guarantees) and a number of indirect metrics (traffic, social, downloads and search performance).
The Google Trends chart below captures the general theme echoed across the data:
Many indicators suggest an even larger gap between the two operators.
The big, obvious caveat: the NFL season can – and likely will – move the scale back to FanDuel’s favor. We’ll get to that later in the article.
But given that FanDuel outperformed DraftKings during the first nine months of 2014, indications of a near-term lead for DraftKings suggest the company is closing the larger gap between the two operators.
What’s driving the shift in the DFS market?
DraftKings holds significant edge in baseball
The expansion of an already-rich relationship with Major League Baseball in April, coupled with promotional relationships with a long list of teams, gives DraftKings a clear advantage when it comes to the baseball segment of DFS.
FanDuel is no slouch on the baseball side, with a robust lobby for the sport across several levels of buy-ins and formats.
But the impact of DraftKings’ marketing partnership with MLB (it’s the “official” DFS game of the league and receives substantial exposure on MLB.com) and myriad pro teams is starting to manifest in on-site activity at DraftKings.
That impact will likely accelerate as the season continues – especially given that DraftKings will be the official sponsor of both All Star Week and as-yet-specified postseason events.
Aggressive addition of new sports brought press and players
While baseball arguably accounts for the majority of DraftKing’s surge, the addition of MMA, golf and NASCAR definitely moved the needle, especially considering that FanDuel does not offer any of the three.
Golf was the biggest headline success, easily outpacing expectations and creating a wave of interest that looks set to carry into the upcoming U.S. Open. Depending on how aggressively DraftKings expands the vertical, golf could end up being one of the site’s primary growth drivers.
MMA brought media coverage and a high-profile partnership with the UFC, but didn’t appear to approach the prize pool numbers of or mainstream interest in golf.
NASCAR remains something of a question mark, but the opportunity to develop a new genre – one where there’s likely heavy demographic overlap with fan bases for sports like football – and the tightly-integrated partnership with NASCAR itself suggest a longer strategic play that will take time to register in the lobby.
Gap already appeared to be closing
Even before the recent surge, there were indications that the delta between the two sites was closing.
In May, FanDuel removed their “market share” claim – which had been set at 80% – from their investors page.
And various reports of revenue projections from each company over the past few months suggest that DraftKings is shrinking the roughly 2-1 advantage in entry fees enjoyed by FanDuel in 2014:
- Crain’s, June 2015: “FanDuel projects that it will roughly triple its annual revenue this year to nearly $200 million, while Draft Kings has estimated that its revenue will be around $150 million”
- ESPN, May 2015: “DraftKings says it will award more than $1 billion in prizes this year and pull in more than $100 million in revenue.”
- Entrepreneur, May 2015: “FanDuel expects to pay out more than $1 billion this year, corresponding to roughly $100 million in revenue.”
- Telegraph, June 2015: “Eccles says FanDuel paid out more than $560m to winners last year and he expects this to rise to $1.5bn this year.”
NFL will ultimately determine winner
Football towers over other sports in the DFS space, driving the vast majority of active players and revenue for the year despite a relatively limited number of events.
It was during the 2014 NFL season that FanDuel’s lead over DraftKings ballooned.
FanDuel appears positioned for a similar burst during the 2015 season:
- The company has locked up marketing relationships with nearly half the NFL.
- FanDuel appears to be funneling significant resources toward the NFL season – resources DraftKings may be hard-pressed to match thanks to the DraftKing’s spending outside of football.
- FanDuel looks poised to accept a massive cash influx with a new funding round reportedly valuing the company at ~$1.5bn.
Should it close soon, DraftKing’s Disney deal could be a game-changer, especially if the terms crowd FanDuel out from promoting their product on ESPN.
But even without access to ESPN there’s still a reasonable chance that FanDuel would come out on top of the NFL season thanks to their built-in advantages (customer base, marketing partnerships) and deeper pockets.
It’s worth noting that, per Fortune, ESPN represents only 10% of FanDuel’s total ad spend.
If the Disney deal doesn’t keep FanDuel off of ESPN, FanDuel can expect to handily win the NFL season (although perhaps not as handily as last year), and, with that win, retake the lead in the DFS market.
At least until summer rolls around again.
