The future outlook for the DFS industry was again heavily downgraded, according to a new research report from Eilers & Krejcik Gaming. The report projected the overall DFS market to reach at best $4B in total annual entry fees by ’20, down from a best-case $7B projection the firm made a year ago and a fraction of the $14B forecast two years ago. In addition to a series of regulatory challenges for DFS in recent years and the failed attempt of DraftKings and FanDuel to merge, the report pointed to a market saturation that now has the companies focused on re-engaging lapsed customers. “We believe that the market for salary-cap DFS players is more or less tapped,” the report reads in part. “It’s difficult to imagine a customer that DraftKings or FanDuel didn’t reach in the last three years. International expansion may provide for minor incremental growth, and there’s a number of customers who weren’t legally able to play real-money DFS last year due to age restrictions that can now, but those sources aren’t anywhere near enough to get the two companies back on the growth track. Their best bet is to reactivate the roughly 85 percent of customers they’ve already acquired and lost.” The report estimated total ’17 DFS entry fees at $3.26B, up 7% from a revised ’16 figure, and industry revenue of $330M. DraftKings and FanDuel continue to dominate the space with a combined market share of 97%. The Eilers & Krejcik report also cited significantly lower Google search traffic for DFS in ’17 compared to the prior year, further signaling reduced consumer interest. The research also pointed to the emergence over the past year of new DFS game formats, something expected to accelerate with potential arrival of legalized sports betting around the country.
