DFS operators cut guarantees as activity falls; Nevada gets first DFS applicant

nevada-daily-fantasy-sports-license-application-salernoDaily fantasy sports operators remained in the black in Week 12 of the NFL season despite activity levels falling for the seventh straight week.

According to analysts at DFS number crunchers SuperLobby.com, FanDuel collected just under $21.3m in guaranteed prize pool (GPP) and cash game fees in Week 12, while paying out $19.1m to winners, resulting in an effective margin of 10.3%, up around 0.3 points from the previous week. The fee total is $588k less than FanDuel reported in Week 11 but the improved margin meant revenue was essentially flat week-to-week.

SuperLobby doesn’t yet track cash games at DraftKings, which saw GPP fees fall slightly to $18.5m in Week 12. But DraftKings paid out just $16.5m for an effective margin of 10.7%, up 0.7 points from Week 11, thanks in part a $1m reduction in its marquee NFL contest guarantee.

The cuts are continuing for both sites in Week 13, with FanDuel cutting its Sunday Million guarantee from $2m to $1.75m, while DraftKings is shaving its Millionaire Maker from $3m to $2.5m. DraftKings has also slashed the contest’s entry fee from $20 down to just $3 while quadrupling the maximum number of entries to nearly one million in a bid to reverse the downward activity trend.

Eilers Research analyst Adam Krejcik (@akrejcik) reported this week that the prize pools at DFS operators’ marquee NFL contests are now below that of the same week last year, suggesting that this year’s decline is more than a seasonal phenomenon. That said, there’s ample evidence that DFS players are shifting their focus to cash games. FanDuel garnered 49.5% of its total entry fees in Week 12 from cash games, up from 32% the previous week.

Yahoo maintained its grip on third place in the DFS charts, and while its Week 12 entry fees inched slightly upward to $862k, margins slipped back into negative territory after two consecutive weeks in the black.

Out in Nevada, the state has received its first application for a DFS license after the Nevada Gaming Control Board’s October declaration that any DFS operator wishing to do business in the state needed to get official approval.

US Fantasy (USF), a new company formed by American Wagering Inc. founder Vic Salerno (pictured), has duly applied for an off-track, pari-mutuel Sports System Operator’s license from the Nevada Gaming Commission. American Wagering, which released the state’s pioneering Leroy’s App mobile sports wagering system, was acquired by UK bookies William Hill in 2011.

As a member of the American Gaming Association Hall of Fame, Salerno appears a shoe-in to become Nevada’s first licensed DFS operator. Salerno says he hopes to have USF up and running by the start of the 2016 NFL season, and USF plans to offer a turnkey DFS solution to would-be operators in other states.