The slowest week of the Daily Fantasy calendar is drawing to a close. But while grinders had little to do before the British Open teed off yesterday, the DFS world has churned out plenty of interesting news.
At the top of the list …
ESPN asks “Are computer scripts bad for daily fantasy sports?“
DraftKings announced last week that it would now allow scripts on its site, touching off a fresh round of debate on the topic of automation in the daily fantasy community.
A quick digression: Some have speculated that the timing—hours after Yahoo’s DFS launch—was intended to minimize attention on the announcement. Perhaps. It would’ve been a savvy move in the world of old media and 24-hour television news cycles to dump this bit of business when somebody else was commanding the headlines. But as the guys at DraftKings surely know, the Internet has its own rhythms, and David Purdum’s article (linked above) proves that people are paying attention to what happens in DFS—even moreso now that mainstreamer Yahoo is involved. If DraftKings had intended stealth, it probably would’ve been better suited to choose a time when fewer eyes were on the sector.
Back to the issue at hand: Purdum talked to numerous industry insiders and came back with an array of opinions on whether the proliferation of scripts are bad for DFS. Of note, Ed Miller (ever the contrarian) offered the somewhat specious argument that entering multiple lineups offered no advantage.
“In fact, it’s less, because each successive lineup is slightly worse,” Miller told ESPN Chalk. “Assuming that you’re able to rank your best, second-best and third-best lineups accurately, by the time you get to your 100th lineup, then it’s not going to win as much money on average.”
FanDuel now valued “well north” of $1 billion
While the games themselves appear to be on the precipice of an arms race for tools, the operators remain engaged in a battle to raise as much capital as possible, as quickly as possible—with most of that money going right back out in the form of marketing.
FanDuel announced this week that its latest round of fundraising had brought in $275 million, including contributions from new investors Google Capital and Time Warner Investments. FanDuel has now raised $363 million since 2009, according to re/code.
Despite missing out on a massive capital investment from ESPN, DraftKings is believed to be on the verge of its own $1 billion valuation, according to the Wall Street Journal.
Eilers Research releases DFS survey results
We can take justifiable issue with the methodology, and it may only be interesting to hacks like yours truly who will be mining these results for weeks to come, but here are some of the more noteworthy findings:
- A majority of DFS users said the “deposit bonus” did not have a major impact on their decision to create an account.
- Over half of survey participants said they do not play on any other site besides FanDuel and DraftKings
- 94 percent said they would not significantly reduce their DFS playing time if sports betting was legal and readily available in their state
DFS arm’s race has already been won
No small sites will join the big boys’ ranks. That’s the message from Ezra Galston, a venture capitalist with experience in the online gaming world, in a compelling article for BreakingVC.
Among a number of salient points:
The effect is that as long as the DFS industry continues to grow (unlike poker, which is now contracting globally) customer acquisition cost grows accordingly. So while it may have theoretically cost FanDuel $5M to attract 100,000 real money customers in 2012, it might (for example) cost $25M to attract the same 100,000 customers in 2015. That provides a strong moat around these already liquid markets.