INDUSTRY FORUM

Comments

  • Ross

    http://about.draftkings.com/2017/06/19/statement-on-ftc-announcement-from-draftkings-ceo-jason-robins-and-fanduel-ceo-nigel-eccles/

    Draftkings has also posted a Q&A page Here

  • sethfein

    @seth1374 said...

    If you think this is great news you are amazingly short sighted. These companies need to merge in order to pool resources, How do you expect them to afford lobbying expenses and lawyer expenses for DFS if they are not merged. Also the rake is going to go up since now these companies are really going to be behind the eight ball to raise revenue and show profitability again if you think about for more than a second this is bad for the future of DFS

    You are assuming that a mega company (where both FD and DK show that all they care about is maximizing revenue at consumer expense) that owns 99% of DFS market won’t simply jack up rates regardless….THAT is amazingly short sighted.

    Separate companies have separate bottomline and shareholders….they will compete for market share (as they should). This means competitive pricing and product.

    This concept is proven in every market so I don’t think it’s short sighted to expect DK and FD to compete against each other for maximum market share.

  • tmarohl

    I think it is great news that they are trying to block the merger. Allows FD and DK to continue to compete against each other giving the consumer more choices. Also will allow competitors to fill some of the market space without being squashed by one giant monopoly.

  • Nookx

    This is great because over-regulation has already screwed dfs. You need a billion dollars to even get started to attempt to take market share from Fanduel and Draftkings because of all the insane fees that go with regulation. Everyone in government has to get there cut. In a perfect world there would be free markets and new sites popping up daily while Fanduel and Draftkings merge. However because of over-regulation this merger should be blocked.

  • madmanjayWV

    @iron_tactics said...

    I thought college sports was squashed by NCAA and others, not DK and FD.

    Fanpicks doesn’t seem to have a problem offering it?

    https://prnt.sc/flob8j

    FROM #BOOM ^

  • Lathum

    I wouldn’t be surprised if the casino lobby had a hand in making sure this happened so they can open their own site down the road. They would have the capitol to offset a few years of losses in order to gain a foothold in the industry. At this point the only way you could ever compete with the big 2 is be willing to lose a ton of money up front so you can offer big prize pools from the start and have top notch iT.

  • BigRay

    @Lathum said...

    I wouldn’t be surprised if the casino lobby had a hand in making sure this happened so they can open their own site down the road. They would have the capitol to offset a few years of losses in order to gain a foothold in the industry. At this point the only way you could ever compete with the big 2 is be willing to lose a ton of money up front so you can offer big prize pools from the start and have top notch iT.

    My sportsbook offers DFS during football season. it was just a couple small prize pools…but they are getting their feet wet with it…

  • FFguru71

    @madmanjayWV said...

    Fanpicks doesn’t seem to have a problem offering it?

    https://prnt.sc/flob8j

    FROM #BOOM ^

    Their contest sizes are a joke though…MY DFS profitability became almost non existent when college FB and BB went away. College BB was the ONE DFS sport where there was a true edge to be gained, and really was the one true DFS sport where because of lack of info available you really had to survive on mostly knowledge of the game/players. That’s where the edge was..I have said all along, I wish DFS was based entirely on knowledge of the game/sport just like College BB was.

  • Barbarian

    @madmanjayWV said...

    Fanpicks doesn’t seem to have a problem offering it?

    https://prnt.sc/flob8j

    FROM #BOOM ^

    wtf is DraftDuel?

  • joeycis

    • Blogger of the Month

    Spent some time reading about this on Twitter. So many DFS pros or touts are talking about this being bad for the industry.

    In what world is a monopoly good for consumers? This should be something any consumer rejoices about.

  • yousif

    • Blogger of the Month

    @seth1374 said...

    If you think this is great news you are amazingly short sighted. These companies need to merge in order to pool resources, How do you expect them to afford lobbying expenses and lawyer expenses for DFS if they are not merged. Also the rake is going to go up since now these companies are really going to be behind the eight ball to raise revenue and show profitability again if you think about for more than a second this is bad for the future of DFS

    Beating the regulators, effective lobbying & legal issues are all temporary. I’m sure their major bankrollers like 21st Century Fox, Comcast, NBC & all the sports leagues who have already invested so much will keep funding them until they win those battles. However, if they merged, that would have been permanent. That means permanently bad deal for DFS players, smaller DFS operators & a permanent monopoly.

    In the short term there will be setbacks for everyone, but if you believe in the long term potential of DFS then it’s definitely a good thing.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @joeycis said...

    Spent some time reading about this on Twitter. So many DFS pros or touts are talking about this being bad for the industry.

    It really depends how bad the situation for these two companies is. Considering two companies that were huge competitors for many years (and honestly did not like each other at all) were willing to merge to me was a pretty big sign these companies are not as strong as we want to believe they are. Personally, if these companies have what it takes to survive on their own, I did not want them to merge. But if this is heading towards one or both of FanDuel or DraftKings being unable to survive (and possibly putting players funds at risk) due to mounting legal costs, it’s obviously the worst possible scenario.

  • bhdevault

    • Lead Moderator

    • Blogger of the Month

    @Stewburtx8 said...

    It really depends how bad the situation for these two companies is. Considering two companies that were huge competitors for many years (and honestly did not like each other at all) were willing to merge to me was a pretty big sign these companies are not as strong as we want to believe they are. Personally, if these companies have what it takes to survive on their own, I did not want them to merge. But if this is heading towards one or both of FanDuel or DraftKings being unable to survive (and possibly putting players funds at risk) due to mounting legal costs, it’s obviously the worst possible scenario.

    Bingo.

  • phillydilly

    axios posted FD and DK financials.
    um. wow.

    https://www.axios.com/the-draftkings-fanduel-financials-2444723508.html

  • sethfein

    @Stewburtx8 said...

    It really depends how bad the situation for these two companies is. Considering two companies that were huge competitors for many years (and honestly did not like each other at all) were willing to merge to me was a pretty big sign these companies are not as strong as we want to believe they are. Personally, if these companies have what it takes to survive on their own, I did not want them to merge. But if this is heading towards one or both of FanDuel or DraftKings being unable to survive (and possibly putting players funds at risk) due to mounting legal costs, it’s obviously the worst possible scenario.

    Then another company will rise to popularity off of their lobbying. They spend all the fees to get 50 states to legalize and someone else will just ride that wave by offering a cheaper platform with same quality.

    The problem that these companies face is that they spent so much $$ advertising the industry as “daily fantasy for average joes” but that is known not to be the reality. It’s very well known, and easy to be seen based on results in most tourneys, that it’s the same people flooding every game with their lineups. For months, people complain on these very forums that it’s unfair gaming and that it’s turning them off from playing. The only people benefiting from the system are “pros” or people who do this for a living. People are simply losing interest because in order to be hooked, you have to win $$ once in awhile. The platform takes rake for providing the means to play but they shouldn’t be using the platform to allow a few hundred to win all the $$ from unsuspecting players.

    Sum it up like this: Pros want massive GPP prize pools because they have legit shot at winning on any given night. They want to continue taking money from people who think you can spend an hour on RG, read some content, and make a lineup.

    Casual players don’t care to win a $10k pool instead, with 10% rake, that has $1-$5 entries.

    PROBLEM: DK/FD make more with higher entry fees. They can only do so if either volume of casual players go up or if pros keep playing with $50-$100k a night. So they have a direct conflict of interest against their own consumer base to please the pros. Fulltiltpoker didn’t force you to play Phil Ivey in $1/$2 blinds because it was immaterial to him. So casual players could make money playing small games and pros make money playing high stakes. But DFS is different in that pros can enter IDENTICAL lineups all over the games. Easy fix but then it’s taking $$ out of their pocket (as everyone responds with here). For example, I looked at the entries of a $1, 20 person tourney where first place got a $6 value satellite ticket….Ganondorf and ChipotleAddict were 2 of the 20. Is it their right? Sure, but it’s just a bad look for the company and turns a lot of people off from the game.

  • sethfein

    Either way, the market demands the product and not the company. You can’t “threaten” your customer base with larger fees if they don’t eat your shit sandwich. Most of America play this as a hobby and have other places to get their sports “fix”. It’s the job of the company to meet the demand and make the customer happy.

    Basic economics here and as many said above, a monopoly is bad for any industry because they don’t have to compete for people’s business. This leads to lower quality and higher costs in most cases.

  • TheRyanFlaherty

    I have to agree with Seth1374.
    What people seemwd to ignore (or didn’t get) regarding the proposed merger, was that it didn’t appear to be two companies attempting a merge to form a monopoly and/or to screw over the customers. It was two companies attempting to merge out of desperation. I.e- to stabilize and ensure the long term success of DFS. To consolidate a dwindling player pool. To be able to rebrand and fight the negative public narratives. Increase new players, etc etc.

    Personally, I think things have stabilized some in the industry, but I think it’s now stuck in a niche category. Without the merger these companies are now going to need to run their businesses in ways they have proven incapable of in the past.

  • thedude404

    • 2015 FanDuel NBA Playboy Mansion Finalist

    @Nookx said...

    This is great because over-regulation has already screwed dfs. You need a billion dollars to even get started to attempt to take market share from Fanduel and Draftkings because of all the insane fees that go with regulation. Everyone in government has to get there cut. In a perfect world there would be free markets and new sites popping up daily while Fanduel and Draftkings merge. However because of over-regulation this merger should be blocked.

    So you are saying it was better when there was unlimited entry or 500 max entry contests?

  • thedude404

    • 2015 FanDuel NBA Playboy Mansion Finalist

    What this all means is the same as it did with a merger. Eventually, only one of these two companies will survive long term.

  • kbarnhill7523

    • 2018 FanDuel WFFC Finalist

    • x2

      2017 FanDuel WFBBC Finalist

    @thedude404 said...

    What this all means is the same as it did with a merger. Eventually, only one of these two companies will survive long term.

    And then THAT company will have a monopoly.

    The two logical end results of natural market behavior with DFS are either one company overtaking the other (with the other going out of business) OR the slow bleed and eventual end of DFS as we know it.

    If you love playing for $50 on Yahoo or FantasyDraft, awesome you’ll probably still have that option. But the days of winning 5-6 figures will be over.

    Maybe thats what a lot of the people in this thread want?

  • phillydilly

    @TheRyanFlaherty said...

    Personally, I think things have stabilized some in the industry, but I think it’s now stuck in a niche category.

    Things may have stabilized, but they’ve stabilized at a point where the companies are still losing tons of money. From that axios link:

    DK:
    2016 (Jan-Sept) revenue: $92 million
    2016 (Jan-Sept) operating loss: $103 million

    FD
    2016 revenue (Jan-Oct): $91 million
    2016 EBITDA loss (Jan-Oct): $59 million
    Cash on hand at end of 2016: $30 million

  • Jvanspro

    I love playing DFS, but don’t feel sorry for them one bit. These two companies were run extremely poor, the financials show it. Huge amounts spent in advertising (which they obviously couldn’t afford). I agree with the FTC and if it means the end to one company so be it. They did it to themselves.

  • WidumBoise

    The FTC has a blocker to the nuts.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @sethfein said...

    Then another company will rise to popularity off of their lobbying. They spend all the fees to get 50 states to legalize and someone else will just ride that wave by offering a cheaper platform with same quality.

    I don’t necessarily think that is true. There are DFS laws on the books in what, 12 states? That is less than 25% of the country. There is a LONG way to go before there is legal clarity on DFS in much of the country.

    FanDuel has been around for almost 7 years I believe. They have never been profitable. DraftKings has been around for 5+ years and have never been profitable. How many other DFS companies have gone under completely? What makes you believe another company could “rise to popularity?” Why would they want to if they do not have legal clarity in many states and are unlikely to be profitable?

  • joeycis

    • Blogger of the Month

    @Stewburtx8 said...

    FanDuel has been around for almost 7 years I believe. They have never been profitable. DraftKings has been around for 5+ years and have never been profitable. How many other DFS companies have gone under completely? What makes you believe another company could “rise to popularity?” Why would they want to if they do not have legal clarity in many states and are unlikely to be profitable?

    While you are correct in all of these assertions, the entire argument for the merger is so that DFS will survive. I suppose there is some merit there. However, if the cost for DFS survival is that the companies can do whatever they want to and literally never do anything innovative because of complacency, maybe DFS shouldn’t survive.

    The population of people who like the merger seems to be constituted by the people who make a living off of it: pros, touts, websites, etc… That is fine. However, that is a minority when compared to the vast amount of people playing on either site that should be protected against that type of monopoly.

  • sethfein

    @joeycis said...

    While you are correct in all of these assertions, the entire argument for the merger is so that DFS will survive. I suppose there is some merit there. However, if the cost for DFS survival is that the companies can do whatever they want to and literally never do anything innovative because of complacency, maybe DFS shouldn’t survive.

    The population of people who like the merger seems to be constituted by the people who make a living off of it: pros, touts, websites, etc… That is fine. However, that is a minority when compared to the vast amount of people playing on either site that should be protected against that type of monopoly.

    Well said and agreed.

    I don’t understand how an industry was built in a manner where people attempt to make millions of dollars a year off of DFS, on top it, with people being paid for their “insight” on RG while they play themselves….all while the platform is investing in those very parties.

    The conflict of interest is enormous. Instead of telling everyone else they are wrong and don’t understand DFS, maybe it’s time for the industry to self-reflect and figure out a way to get millions of people to play daily without trying to appease the “pros”….because they simply can’t co-exist.

    As for the financials of these companies, accounting gimmicks allow huge write-offs to present a company as operating at a loss. Majority of tech companies go public without making a dollar profit. Groupon had $550 million loss at their IPO.

    Like any growth company, a lot of money is spent on advertising, building infrastructure and legal fees but the investment is for maturity stage where market traction is accomplished (so no more need for high ad $$), infrastructure is setup (less maintenance costs) etc.

    I just find it hilarious that the current tactic is to get people to feel “sorry” for FD/DK or even the pros who rely on this industry….the very people who are ruining what it could have been. It won’t work.

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