A wild Friday in the daily fantasy sports industry started with what appeared to be a complete shutdown of DFS sites in New York. Later in the day, a temporary reprieve was issued.
With that backdrop, it was a rough week for the major DFS operators’ guaranteed prize pool (GPP) contests in the NFL, according to a weekly report released Tuesday by DFS analytics website SuperLobby.com.
Perspective -EVERY operator we cover had their lowest week of the season in regards to entry fees. Some dropped by as much as 40%
— SuperLobby (@superlobby) December 14, 2015
While FanDuel and DraftKings reduced their payouts, falling entry fees hampered all nine sites SuperLobby tracks, including a double-digit percentage drop at FanDuel.
Of course, much of this is somewhat predictable as uncertainty in New York continues and regulator interest piquing in other states. To put the stakes in New York in some perspective:
NY customers paid more than $200 million in entry fees to DraftKings & FanDuel in 2015.
— Darren Rovell (@darrenrovell) December 11, 2015
That easily makes it among the largest markets for DFS. But while entry fees have been down, nearly as important is that both DraftKings and FanDuel have remained in the black on their contest offerings.
A tough week for DFS operators
Another week brought another significant drop in entry fees for both DFS giants, but both managed to blunt the blow of falling revenue by boosting their effective margins.
DraftKings saw its eighth consecutive week of falling GPP entry fees for its Sunday NFL games. It hauled in $17.1 million in entry fees for Week 14, down from $18.5 million in Week 13.
As it did last week, DraftKings was able to preserve much of its net revenue by reducing its payouts. DraftKings paid out $15.2 million, down significantly from $16.5 million the week before. That boosted its effective margin to 11.1 percent from 10.7 percent. But its net revenue from its GPPs still fell from $2 million to $1.9 million.
FanDuel reopened to the New York market after Friday’s legal wrangling — New Yorkers with cash already in their accounts could play contests at FanDuel, although no new deposits were allowed.
But FanDuel still saw its GPPs take another hit, too. FanDuel brought in $12.5 million in GPP entry fees, a drop from $14.8 million in Week 13, according to FanDuel’s own preliminary numbers sent to Legal Sports Report.
FanDuel managed to boost its effective margin to 11.7 percent, up from 10.97 percent, with pay outs of $11 million. That left FanDuel with only a slight drop in net revenue, from $1.56 million to $1.5 million, for all its GPPs.
Across all of FanDuel’s NFL games for Sunday, including its non-guaranteed contests (DraftKings does not release that data), FanDuel saw its entry fees drop from $21.3 million in Week 13 to $18.8 million in Week 14 after taking a hit to its cash games.
A closer look at the DFS numbers
According to the SuperLobby data:
- DraftKings’ GPP entry fees were down 7.5 percent week over week and 32 percent from its Week 5 high of $25 million.
- FanDuel’s 11.7 percent drop in entry fees from Week 13 across all its games dropped it further from its Week 6 high of $40 million. That marks a 53 percent drop.
- Despite the consistent week-over-week drops in entry fees, FanDuel has posted 14 consecutive profitable weeks.
- No. 3 DFS operators Yahoo brought in $779,896 in entry fees and paid out $729,000, posting another profitable week. But Yahoo entry fees are down 40 percent since its Week 5 high of $1.32 million.
- All nine of the sites SuperLobby tracks posted a season low in entry fees.
Another conservative week in DFS advertising
For the fifth straight Monday morning, neither DraftKings nor FanDuel registered in the iSpot.tv top 10 of television advertisers.
This is of little surprise as both DFS heavyweights have significantly altered their marketing plans since the early NFL onslaught, presumably in part to conserve their resources for the current legal battles. By contrast, DraftKings and FanDuel combined to spend nearly $120 million on advertising in September alone, according to analysis from MoffettNathanson.
The landscape has changed dramatically, too. Last week, ESPN and officials of the College Football Playoff agreed not to air daily fantasy sports ads during the broadcast of the semifinals and championship game. This is a trend in college sports, as daily fantasy ads will also be barred from the NCAA men’s basketball tournament in March.
And among all the legal turmoil for daily fantasy sports, there was concern last week in Massachusetts and New York about the effect of television advertising.
@MassCouncilCG voices concern over amount of #DFS advertising to minors, whether online or in public
— MA Gaming Commission (@MassGamingComm) December 10, 2015
The week ahead for DFS
After dramatically altering its headliner Millionaire Maker contest, last week DraftKings apparently wants to make another splash in Week 15.
With New York offering at least some certainty for the time being, the Millionaire Maker will offer a $5 million guarantee for the first time since Week 12 of the NFL season, with $1 million again going to the winner. In addition, the entry fee is back up to $20.
Last week, DraftKings dropped the entry fee to $3 and offered just a $2.5 million guarantee. The smaller entry fee could have had an impact on DraftKings’ total entry fee take.
After dropping the guarantee of its Sunday Million contest ahead of Week 14, FanDuel will hold course for Week 15 with a $1.75 million guarantee and $175,000 to the winner. The entry fee will remain the same, too, at $25.
@4for4_Josh @superlobby in the past there was a spike usually around turkey day and carried thru week 17. consumer uncertainty in play?
— Michael Rathburn (@BethodMan74) December 14, 2015
A major test could be this week when DraftKings and FanDuel, which is allowing action but not taking new deposits in the Empire State, both operate in New York for the first time since November when the attorney general ordered both sites “to stop taking bets” in New York.
Perhaps the short-term fix in New York will provide some confidence for DFS players.
