FantasyDraft: Rake-Free Business Model
Putting players first has been the motto of FantasyDraft for quite some time – and that’s just what they’re doing with their dramatic shift to a rake-free business model.
The fees associated with entering DFS contests (aka “the rake”) have grown considerably over the past several years, as businesses in the daily fantasy space mature and shift focus from rapid growth to sustainable operation. Players who have noticed this rise in rake levels have pointed out some contests with rake as high as 18% to mostly deaf ears – the sites have to make money somehow, and rake has been the standard model for generating revenue.
FantasyDraft is aiming to change that by introducing a completely different concept while still offering large prize pools and a variety of contests for players of all buy-in levels. The rake-free model is simple. Instead of collecting a percentage of the entry fees, players will pay a monthly subscription fee based on their own personal volume of entries.
The various subscription tiers are listed below, with a comparison of the rake that you’d be paying at each level under a traditional DFS rake system.
| Membership Tier | Buy-in Total | Subscription Fee | Rake Based Site Average |
|---|---|---|---|
| PlayersFirst | up to $100 | Free | $10 |
| Starter | up to $1,000 | $5.99 | $100 |
| All-American | up to $3,000 | $14.99 | $300 |
| Professional | up to $10,000 | $49.99 | $1,000 |
| All-Star | up to $25,000 | $99.99 | $2,500 |
| MVP | up to $100,000 | $499.99 | $10,000 |
| Hall of Fame | Unlimited | $999.99 | $10,000+ |
As you can see, the subscription options are widely flexible and affordable, especially when compared to the rake you’d be paying on a traditional rake-based DFS site.
Outside of rake, the lopsided payout structures of the majority of GPP contests has been a major discussion point of players for quite some time. FantasyDraft is tackling this as well, starting with the NFL season kickoff. Players that chase various 7-figure payout contests will notice that the Hooters NFL Week 1 $1,000,000 GPP has a much flatter payout structure. Instead of overloading the payouts to the top 10 positions,the top prize is $100,000 (still a hefty win for any player), rather than the customer 30%+ of the pool going just to the number 1 finisher. Leveling things out while still giving the top dog a major payout certainly makes for a more enjoyable gameday for the vast majority of players that aren’t going to secure a top 10 spot. Just another “players first” approach that many are sure to benefit from.
Now understandably, the subscription fees generate less revenue than traditional rake for FantasyDraft – that’s the point. But that also means those thinner margins need to be supplemented in other ways. While some of those ways include branding partnerships with other major corporations like Hooters – their partner for Week 1 – another change that directly impacts players is the new deposit fee. Players will now have to pay a 3% transaction fee for each transaction made within their account. These fees are 100% put towards the real transaction costs for processing payments, and anybody who’s ever dealt in the online payments space knows that these fees add up. Players handling their own fees helps FantasyDraft maintain the affordable subscription levels now implemented on the site.
Our own Dan Back spoke with FantasyDraft CEO and co-founder Steve Krombolz recently to discuss the exciting changes on FantasyDraft and what players can expect for the NFL season and beyond.
When asked why FantasyDraft made this shift to a rake-free model, the decision ultimately came down to what players wanted.
“We wanted to make some big changes, we wanted to make a splash, we wanted to be disruptive. We always came back to what’s the biggest pain point for DFS players…Without fail the number one complaint we always saw was related to rake.”
You can catch the full podcast interview here for more insight on how this change impacts players in a positive way as well as details on how the subscription plans work.