Thursday, March 3, 2016 : D.F.S. MARKET LEADERS GROWTH CONTINUED IN 2015
But DraftKings and FanDuel are unlikely to repeat the heydays of 2015 in the current legal and political environment.
2015 was a good year for daily fantasy sports market leaders FanDuel and DraftKings, with entry fees trebling year-on-year although profitability remained elusive due to high marketing expenses, the publication Daily Fantasy News reported this week.
And, given the currently largely hostile political and legal environment since the last quarter of 2015, it is unlikely that the heydays of 2015 will be experienced again, at least in the immediate future.
DFS News reports that FanDuel and DraftKings attracted $3 billion in revenues in 2015, but spent hundreds of millions on marketing as they built up their player bases.
FanDuel managed to best its arch rival DraftKings in revenues by $600 million last year, the publication notes, quoting estimates from analysts in the absence of numbers from the companies themselves.
Those analyst estimates are that Fan Duel was tops in DFS in 2015, with nearly $1.8 billion in player entry fees; with DraftKings trailing $600 million with $1.2 billion.
"Of the $3.1 billion of fees reaped in total, $1.94 billion came from the top 10 US markets. California, which hastily passed a DFS bill recently, led the nation with $357 million in fees. New York, where Atty. Gen. Eric Schneiderman has vowed to shut down the industry, came in second with $267 million," DFS News reports.
FanDuel spokesmen have confirmed that their membership has breached the 6 million player benchmark.
Analysts believe that the DFS industry has the potential to reach $14 billion in entry fees by 2020, but a lot depends on how individual states decide to treat the genre in terms of their gambling laws. If enough states decide to ban DFS, entry fees could remain stuck in a $2 to $4 billion a year rut, they warn.
To date around 20 US states have introduced DFS bills seeking to legalise or regulate the industry.
In related news, the publication Daily Dot reports that DraftKings has reversed out of sponsorship activity with several eSports teams despite its launch last September of a fantasy eSports platform offering contests for League of Legends.
Shortly thereafter, the DFS operator announced deals with six eSports teams, but these have now been abandoned, the report notes.
In the absence of a corporate explanation, the speculation is that DraftKings is feeling the financial pain of multiple lobbying and legal initiative expenses as it fights for survival in the US market.
The Daily Dot quotes unnamed sources as revealing that as far back as November 2015 DraftKings was asking to defer payments in some of its sponsorship deals.
The only comment from DraftKings has been:
“Our partnerships in the growing eSports field have been rewarding and we value our continued relationships with these businesses. We remain committed to offering exciting eSports DFS contests through the DraftKings platform and will continue to explore opportunities accordingly.”
Despite the reports, DraftKings still appears active on the sponsorship market; its recent entry to the UK market has been followed by announcements of sponsorship deals with three English Premier League teams.