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Daily fantasy sports sites suffer second consecutive week of shrinkage

TAGs: daily fantasy sports, DraftKings, fanduel, Minnesota

daily-fantasy-sports-shrinking-entry-feesDaily fantasy sports sites suffered their second consecutive week of declining entry fees following news of more high-level law enforcement investigations of the sector.

According to numbers crunched by SuperLobby.com, total entry fees in guaranteed prize pools (GPP) for Week 7 of the NFL season came to just under $22.7m at DraftKings, down from $22.9m in Week 6. Rival FanDuel suffered a steeper decline, falling to just under $19.1m from $19.9m in Week 6.

Multiple factors have been credited with driving the declines, including the onslaught of negative press that has engulfed the DFS industry since the DraftKings’ data-leak controversy, the subsequent decision to ban DFS employees – many of whom were among the highest volume DFS players – from playing real-money DFS, and a slightly more restrained approach to television ad spending.

Despite the decline in fees, both sites reported an increase in the total number of entries, with DraftKings rising from 3.76m to 4.02m, while FanDuel’s entries rose 100k to 3.4m. Both sites also took in more money than they paid out, which was partly due to each site having reduced their marquee contests’ guaranteed payouts for Week 7. Both sites have opted to maintain their current guarantees for Week 8 ($6m at DraftKings, $4m at FanDuel).

The second-tier DFS sites were all still firmly mired in negative payout territory, although Yahoo’s DFS offering suffered only a slight dip in its entry fees, falling to $1.17m from $1.22m the previous week.

MINNESOTA REP SEEKS TO END DFS OPERATORS “SKETCHY RULES”
Monday saw Minnesota join the ranks of states seeking to impose regulation on the DFS sector. While Minnesota’s legislature is in recess until March 2016, state Rep. Joe Atkins says he will propose legislation to eliminate the “sketchy rules, uncertain legality and alleged scandals” plaguing the DFS industry.

Atkins insists that he believes DFS “should be called legal” and says he’s willing to work with DFS operators to revise his bill’s language to satisfy any concerns they may have. Atkins says his goal is to ensure that DFS is “a legit operation and that Minnesotans are going to get what they pay for.” Atkins’ legislation would require all DFS operators who handle over $50k in annual entry fees to be licensed by the Minnesota Department of Public Safety.

The decision to put DFS under the watch of the Public Safety folks, rather than the Minnesota Gambling Control Board, is key to preserving the fiction that DFS isn’t gambling. Similar legislation in California would put DFS under the watch of the state’s Department of Justice. Under the federal PASPA sports betting prohibition, all but four US states are prevented from regulating legal sports betting within their borders.

Nevada, which recently ordered DFS operators to either get a gambling license of exit the market, enjoys a PASPA exemption, and thus has the ability to call a spade a spade while other states are forced to continue this semantic subterfuge (at least, until New Jersey’s legal challenge succeeds).

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