Daily fantasy sports suffers first decline following negative media onslaught

daily-fantasy-sports-activity-declinesDaily fantasy sports sites saw reduced participation in their marquee NFL contests this weekend, suggesting the relentless march of negative publicity is beginning to take its toll.

According to UK-based analysts SuperLobby, entry fees for the NFL Week 6 guaranteed prize pools (GPP) on DraftKings came to $22.9m, down 12% from Week 5. FanDuel’s NFL GPP fees were down just over 3% to $19.9m.

The declines mark the first week-to-week decrease for both sites so far this NFL season. Total NFL GPP entries across all DFS operators were 7.3m, down over 6% from Week 5.

DraftKings’ total number of paid GPP entries fell 9% to 3.76m while FanDuel suffered a 3% dip to 3.27m. DraftKings’ $7m Millionaire Maker tournament suffered a 10% drop in entries to 353k while FanDuel’s NFL Sunday Million was basically flat at 229k.

Both sites’ marquee contests took in more entry revenue than they paid out, although SuperLobby’s data doesn’t take into account DFS operators’ promotional free entries. SuperLobby also doesn’t report DFS operators’ cash games revenue.

Both DraftKings and FanDuel have now reduced the guaranteed payout in their Week 7 NFL contests by $1m apiece. DraftKings’ Millionaire Maker will still offer its winner a $1m payday but the overall payout will be $6m, while FanDuel’s NFL Sunday Million will pay out a total of $4m and its overall winner will receive $500k rather than $1m.

Yahoo’s DFS product has also reduced its Week 7 guarantee after a disappointing Week 6 performance. Yahoo’s marquee NFL contest sported around $120k in overlay on Sunday after posting its first positive numbers in Week 5. Amaya Gaming’s StarsDraft site reported a rise in its total entry fees but the site still paid out nearly $100k more than it received.

It remains to be seen whether Week 6’s retreat is a blip or an indication that the constant drumbeat of bad press has convinced some DFS players to rethink their interest. DFS operators don’t release their new player signup data, but it’s hard to see how the daily barrage of negativity would have encouraged those who had yet to open DFS accounts that doing so now would be a good idea.

DFS got a rare moment of good press on Monday, as DraftKings released a statement saying a third-party review had cleared one of its employees of wrongdoing in the data leak that kicked off the DFS kerfuffle. Following a two-week review, the law firm of Greenberg Traurig says there’s no evidence that Ethan Haskell used sensitive data to win $350k playing DFS on FanDuel.

According to the statement, Greenberg Traurig’s investigation concluded that Haskell locked his FanDuel contest lineup at 3:28am on Sunday, Sept. 27, 40 minutes before he received an Excel file of player ownership percentages on DraftKings.

DraftKings CEO Jason Robins said the company was “very pleased” that Greenberg Traurig’s investigation had “confirmed the findings to our internal review of this matter.” Robins claimed the investigation also concluded that it “was not even possible for non-public information to have been used improperly.”

New York Attorney General Eric Schneiderman has yet to reveal the findings of his own investigation into the controversy. Two weeks ago, Schneiderman sent a letter to both DraftKings and FanDuel seeking details of both companies’ data handling policies. In Monday’s statement, Robins said DraftKings would “continue to work with all relevant authorities” to reassure DFS players that the contests were kosher.

Meanwhile, yet another federal politician is pressing for Congress to probe the DFS industry. Rep. Frank Pallone (D-NJ), a ranking member of the House Energy and Commerce Committee, led the charge for DFS hearings and now Rep. Jason Chaffetz (R-UT), who chairs the House Committee on Oversight and Government Reform, wants his own panel to shine a light up DFS’ back passage.

On Friday, the New York Post quoted a Washington source saying Chaffetz wanted his Committee to hold hearings into the DFS industry in November. Last week, Politico reported that the National Football League was attempting to use its lobbying clout to scuttle any DFS hearings but the Post’s source claimed there was “no evidence” of the NFL “trying to protect fantasy sports.”

Pallone has been accused of having an ulterior motive in going after DFS, namely, to press the federal government to rethink its sports betting prohibition, something Pallone’s home state is attempting to achieve via the courts.

Chaffetz may have his own ulterior motive, given that he introduced the Sheldon Adelson-backed anti-online gambling Restoration of America’s Wire Act (RAWA) into the House in February. With RAWA’s prospects for passage looking increasingly dim, taking a shot at DFS would seem a good way to show Sheldon that Jason was still fighting the good fight and thus was worthy of a future campaign contribution or two.