Daily Fantasy Sports Market Size Forecast: Revised Down, With Cloudy Prospects

Written By Dustin Gouker on February 22, 2016
DFS industry future predictions

A forecast for the size of the daily fantasy sports market has been revised back by Eilers & Krejcik Gaming in its 2016 report, with a wide range of possible outcomes for the industry in the next five years.

What the forecast is for DFS

The report from Eilers (preview here; full version $) takes a look at nearly every aspect of the DFS industry, but it also takes a stab at projecting the DFS market. That’s certainly a difficult task given the legal and regulatory uncertainty that will be the major storyline for the industry in 2016.

Eilers admitted as much in trying to forecast where the market was headed:

The trajectory for 2015 viewed from 2014 was clear – growth ahead, with the only question being how much and how fast. But viewing the year ahead today, it is easy to imagine a number of wildly divergent trajectories for DFS based on political, legal, economic, business model, consumer, and market pressures.

Nonetheless, a graph takes a look at possible outcomes for the next five years, with even the “best-case scenario” falling well short of bullish forecast just a year ago:


A closer look at the DFS forecast chart

The three models on the chart depend on different assumptions on how the DFS industry proceeds moving forward, mostly based on legal and regulatory issues and how they are resolved. (See the full report for details.)

The old forecast — of about $18 billion in entry fees across the industry by 2020 — is now out the window. That forecast is replaced by three divergent possibilities:

  • A best-case scenario of nearly all favorable outcomes over the next five years, with a market size of $14 billion in entry fees by 2020.
  • A “base-case” scenario where entry fees top $8 billion by 2020, with some positive and negative legal outcomes.
  • A worst-case scenario where things break badly for the DFS industry, where market size dips in the short term and returns to 2015 levels (More than $3 billion in entry fees) by 2020.

How the states shake out will be crucial

How the market will evolve largely depends on how the states continue to react to the industry from a legislative standpoint, and the outcome of legal concerns in the biggest states in the country, like New York, Illinois and Texas.

The industry has succeeded in getting regulatory/legalization bills introduced, although none has become law, yet.

Should those bills continue to make progress, it would bode well for the forecast for DFS; the industry could hit or exceed the base-case scenario. Bad outcomes would make the base-case scenario look ideal.

Also at play: The money

The 2015 bullish forecast for DFS was based on increasing amounts of cash — in terms of revenue, fundraising, and possible IPOs for DraftKings and FanDuel — coming into the industry to help it scale.

But the fundraising market is vastly different today than it was just six months ago; an IPO would not seem to be in the cards at present. And user acquisition budgets at the “big two” are likely to be far lower than they were in CY 15.

The only certain for now? It’s clear that forecasting what will happen with the DFS market will be a moving target for the immediate future.

Dustin Gouker Avatar
Written by
Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

View all posts by Dustin Gouker
Privacy Policy