New data from daily fantasy sports analytics outfit SuperLobby this morning shows that both DraftKings and FanDuel saw growth in football entries this past weekend, but further declines in entry fees received. DraftKings drew 4.02 million NFL guaranteed prize pool entries, up from 3.76 million the prior weekend. However, entry fees fell from $22.86M to $22.68M. FanDuel saw a similar trend, with NFL GPP entries rising to 3.4 million from 3.27 million, but fees declining from $19.93M to $19.07M. Both of the industry's two heavyweights again posted positive operating margins on their NFL games over the most weekend, when not including marketing expenses. "Despite all the legal and media drama that has dogged the daily fantasy sports industry this month, 'the Big Two' have been in the black four October Sundays out of four when it comes to NFL GPPs," the SuperLobby report reads (Eric Fisher, Staff Writer). Meanwhile, in N.Y., Jacqueline Williams reported DraftKings "has ended its partnership with the World Series of Poker amid rising questions over whether fantasy sports, which are unregulated, should be considered gambling." DraftKings "has had a prominent advertising presence" at WSOP events and offered exclusive WSOP-branded contests that "awarded winners free entries to the final poker tournament." But with regulators and law-enforcement officials on several fronts "scrutinizing the daily fantasy sports industry, DraftKings is moving to distance itself from poker, which is considered gambling and is heavily regulated" in the U.S. (N.Y. TIMES, 10/24).
ALL NEWS IS GOOD NEWS? In Boston, Callum Borchers noted small-scale fantasy sports operators "have been mostly overlooked in the recent brouhaha over the legality and integrity of cash contests," and there are "benefits as well as drawbacks" of that. They will "happily scoop up customers seeking alternatives and are glad to avoid FBI scrutiny, but they also worry about being left out of regulatory conversations." TopLine Game Labs CEO David Geller, who raised $25M in venture capital for his company, which makes the DailyMVP fantasy app, said, "Any investor looking to invest in daily fantasy would certainly pause. I think it would be very challenging to go out and raise a round for something like a DraftKings or FanDuel right now" (BOSTON GLOBE, 10/24).
WELL, WHICH IS IT? ESPN.com's Daren Rovell reported Cowboys Owner Jerry Jones yesterday "defended his investment in daily fantasy company DraftKings." Jones said, "From my perspective, anything that follows the rules, that causes and creates more interest and more fan participation, I'm really for." He added, "I don't think DraftKings or FanDuel in any way compromise our players on the football field because it's all fantasy. It has no bearing on the outcome of the game at all" (ESPN.com, 10/25). But in N.Y., Phil Mushnick noted DraftKings' and FanDuel's biggest investors -- "pro leagues, team owners, TV networks" -- either "didn’t bother to ask questions or they chose not to ask." MLB "sold its name and game not knowing if its new business partner was a sucker-bet operation or if the winners and the payouts could be influenced by inside knowledge." Mushnick: "What you and I would have demanded to know on Day 1 of discussions, we’re now asked to believe that MLB -- and the NBA, NHL, FOX, MSG, ESPN, NBC, Turner TV, the NFLPA and Patriots’ owner Robert Kraft, among others -- didn’t bother to ask or chose to not ask" (N.Y. POST, 10/25).
SCARE TACTICS: A WALL STREET JOURNAL editorial stated by "casting a pall over the whole enterprise, the government offensive threatens to scare off fantasy investors and sponsors." The blitz "might alienate fantasy players who are led to believe that the games are rigged." However, most amateurs "play fantasy sports for fun rather than money." Those "purporting to protect the little guy by beating up deep-pocketed businesses without evidence are perpetrating a scam of their own" (WALL STREET JOURNAL, 10/24). .
