Daily fantasy sports operator DraftKings was the seventh highest spender on television advertising in the past week.
According to iSpot.tv’s rankings, DraftKings spent an estimated $9,458,979 hawking its wares on television in the last seven days, spending significantly more than Verizon, McDonald’s and Nissan. Clearly, somebody’s gearing up for next month’s kickoff of a new National Football League season.
While the sum may seem staggering, it bears reminding that DraftKings’ deal with sports broadcaster ESPN reportedly requires DraftKings to spend $250m over the next two years marketing its product across ESPN properties. Also, the NFL is the undisputed king of DFS sports, so it pays to make hay while the sun shines.
In July, DraftKings CEO Jason Robins told AdWeek that DFS could be “among the top categories of advertising in sports over the next year” because “as a relatively new company, advertising has been the best way to introduce DraftKings to new players.”
Regardless, the sheer vastness of that weekly expenditure underscores the lack of profitability that has so far plagued DraftKings and its archrival FanDuel. Hard to stay in the black when you’re paying through the nose – as well as ears, eyes, throat and ass – for customer acquisition.
MGM’S MURREN HAS ANOTHER GO AT ‘DFS ISN’T GAMBLING’ CANARD
Meanwhile, the ever popular ‘is DFS gambling” question has received another ‘well, duh’ response from Jim Murren, CEO of casino operator MGM Resorts. In April, Murren declared that anyone who didn’t consider DFS to be gambling was “absolutely, utterly wrong” and his opinion hasn’t wavered since that day.
In a recent interview with Las Vegas NBC affiliate KSNV, Murren said “of course, [DFS is] gambling,” while wondering “who in the world thinks that FanDuel or DraftKings … who’s going to tell me that’s not gambling?” (Murren also revealed that his wife is an avid fantasy player who assembles her rosters based on players’ lack of criminal record, which Murren said ‘makes it surprisingly hard to field a team.”)
Murren went on to say that he wasn’t trying to “impose my morals on somebody else,” insisting he was “cool” with people choosing to gamble on DFS (or online poker, for that matter). But he noted that DFS was “not regulated” despite people “doing it all over the place.”
REGULATORY WAKEUP COMING
Consensus appears to be growing that DFS is in for a regulatory wake-up call. DraftKings’ recent receipt of a UK online gambling license and the imminent entry of Amaya Gaming’s PokerStars brand into the DFS space have only reinforced the belief that DFS is gambling with a capital G.
Nevada gaming regulators announced last month that they would be studying whether DFS was an activity that should be regulated like any other gambling sector. This spawned much debate as to whether Nevada was hoping to set itself up as a national DFS regulator – much as it hoped to do for online poker back in 2011. The American Gaming Association, which Murren chairs, also plans to release a study on the DFS sector before the year is through.
Earlier this month, Nevada Gaming Control Board chairman A.G. Burnett told Reuters that “when chance begins to govern the outcome more than skill, you have a form of gaming, and that’s when the need for regulation kicks in.” And with it, even more costs on an already profit-elusive sector.
