That is perhaps an extreme way to characterize one of the most divisive ways the two DFS market leaders – FanDuel and DraftKings – habitually present themselves to outsiders.
But at its most extreme, that’s what the contrast feels like.
FanDuel keeps poker beyond arm’s length
FanDuel isn’t hostile to poker players – but at almost every available opportunity, the company has emphatically rebuked the existence of some customer acquisition bridge between poker and DFS.
During a presentation given at FSTA’s Winter Meeting earlier this year, FanDuel CEO Nigel Eccles undermined the oft-presumed connection via a slide showing console video gaming to be much more popular than online poker among regular DFS users. This was only days after the company’s CFO Matthew King delivered comments to a similar effect at the NCLGS Winter Meeting.
FanDuel’s archnemesis DraftKings, on the other hand, can’t seem to snap up co-marketing partnerships with poker companies fast enough. The Boston-headquartered start-up is the official daily fantasy partner of both the WPT and the WSOP.
Ex-professional poker player Jon Aguiar is so prefixed because he’s been DraftKings’ full-time Director of Customer Experience since 2012. Even the company’s CFO, Tim Dent, has a poker background as the former CEO of Everest Poker.
“Due to their history, they probably see some value in advertising and sponsoring poker events,” says Justine Sacco, FanDuel’s Director of Communications, of the poker vets employed by her company’s main competitor.
“But our data indicates that it’s actually very wasteful marketing,” Sacco told ODF (emphasis ours).
“In the fourth quarter of 2014, FanDuel had more than three times the number of paying users that other sites, even those that have raised comparable amounts, were able to attract. We look at those numbers and deduce that our marketing dollars are being spent much more efficiently.”
DraftKings sees it differently
Wow! Wasteful marketing? You hear a completely different tune when you put the same question to DraftKing’s Jon Aguiar.
“The poker industry has been incredibly valuable to DraftKings,” Aguiar told ODF. “I credit a very passionate base of poker players for a good part of the success we had growing the company from 2012 through our huge ramp-up in customer acquisition for the 2014-15 NFL season.”
Lacking access to the sets of data both companies claim to rely on (neither company is yet public), it is difficult to measure which of the two has a better read on a poker player’s expected value to DFS.
But perhaps that isn’t necessary once we take a closer look at what each company is actually stating.
DraftKings says that marketing to poker players has been good for their company. FanDuel doesn’t think doing the same would be the best use of their own marketing spend. One is not necessarily a repudiation of the other. Forced to focus primarily on its own bottom line, neither start-up has the time nor interest to establish some scientific basis for universal poker-fantasy conversion meant to satisfy the curiosity of observers like us.
But there’s still an implicit statement, in each company’s attitude, about how it evaluates a particular group of consumers: poker players. A more applicable and relevant question thus becomes how these two companies, which are otherwise so similar in many ways, came to such polarized conclusions on the same issue.
Surely, it could come down to a simple need for differentiation. Between the two of them, FanDuel and DraftKings practically control the DFS space – but that makes them the opposite of collaborators.
“FanDuel doesn’t have to do what DraftKings is doing, because FanDuel has a bigger market share,” says Seth Young, COO of Star Fantasy Leagues, which has carved its place in the DFS world by developing white-label fantasy sports solutions on a B2B basis.
“DraftKings, in my opinion, is looking for more unique ways to market that FanDuel isn’t pursuing, so they can capture a segment of the market that FanDuel won’t touch.”
Where you start is where you end up
There could also be more to it than that. Cal Spears, the co-founder of PocketFives, a popular online poker community hub, recalls the “early days” of the daily fantasy sports world when “there wasn’t a lot of money to be won – the prize pools just weren’t very big. Back then, there was a lot of trouble getting poker players to play daily fantasy. We would advertise it on PocketFives, but people didn’t really care.”
Now comes the clincher: “FanDuel was around in those early days, and DraftKings wasn’t.”
Spears imagines FanDuel “remembers this early period when there wasn’t a lot of interest by the poker community. By the time DraftKings entered the market, the prize pools were much bigger, and DraftKings came out of the gate trying to match those, with promos like overlays (which poker players are familiar with). Suddenly, there was significantly more money to be made. That’s when poker players became a lot more interested.”
If Spears did not think there was some crossover between poker and DFS, it is unlikely he would have also co-founded RotoGrinders – basically a clone of PocketFives for the DFS world, featuring a similar ranking system and a strong focus on community-building.
The crossover popularity of these features leads Spears to describe poker and fantasy grinders alike as “critical thinkers with expendable income and an affinity for skill-games.”
Similar consumers, different contexts
Although the players may be similar, the games are not. Playing a poker tournament for hours – and that’s if you’re doing well – is a much different gaming experience than banging out a fantasy team in forty-five minutes and then sitting back to watch the games.
What could prompt a person to go from one game to another?
In parting from convention, Aguiar opts to eschew the term “convert” in favor of one we seldom hear applied to crossover talk: “Educate.”
“Our position is basically that poker players are skill gamers at the core,” Aguiar explains.
“They enjoy intellectually stimulating games, and they are already comfortable with the concept of Internet gaming. Once they get to DraftKings, they already know how to deposit, they understand how a bonus works, they can navigate the lobby with ease. That’s all natural to online poker players.”
The takeaway here isn’t so much that poker and fantasy players are “the same,” but that those who are familiar with online poker will have an easier time warming up to a DFS product than those who have never played online poker at all. Hearing Aguiar put it this way doesn’t just elucidate DraftKings’ philosophy – it refines FanDuel’s by comparison.
Asked about her company’s general outlook on player acquisition, Sacco tells us “FanDuel only pursues business opportunities that target sports fans and fantasy users.” (All emphasis ours.) “Our data shows that marketing outside of sports and entertainment channels would not be effective – so that’s where we focus.”
Fair enough! For all the capital that’s been raised by both companies individually, DFS is still a young space with much left to prove.
In all likelihood, FanDuel and DraftKings are at the top of the pyramid because they took risks and made different decisions. Perhaps by the time either company posts a profit, we’ll have a better idea of which poker-facing attitude paid off first.