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

  • Ravensfan929

    Not sure why everybody thinks this is great news, they obviously were having financial problems if they were willing to merge in the first place. This could be very bad for dfs

  • sethayates

    @Ravensfan929 said...

    Not sure why everybody thinks this is great news, they obviously were having financial problems if they were willing to merge in the first place. This could be very bad for dfs

    To be clear, I think a big part of the merger was FD/DK not wanting to take a “down round.” In reading that Axios article, FanDuel had $30M cash on hand at the end of 2016. If the article is correct (FD had no comment) then FD cut off talks about future funding assuming that they could survive on $30M.

    That Axios article says DK raised $100M after 2016 which I remember hearing elsewhere. At some point, the pressure is going to be on these companies to either make a profit or go public. The advertising blitz produced massive growth but my hunch is that there’s a smaller market for DFS than many want to believe.

    You can’t continue taking down round after down round and diluting the company down to nothing. Without this merger, one of these companies could possibly go under. People that haven’t been around the DFS industry long forget that at one point DraftDay was the number two site. They were eventually surpassed by DK as DK kept pushing the envelope with overlay and an ad blitz.

    It’s not a given that these two sites will remain #1 and #2 forever. Regardless of what the FTC does, they don’t drive our decisions as DFS players. If one site went out of business those players would either go to the other site or find a new #2.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @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.

    To be clear, I would prefer for these two companies to operate separately if it is feasible for them to do so. I just fear both companies are in fact struggling right now with costs/expenses and do not see an end in sight. If one (or hopefully not both) of these companies goes under, I think it will be a lot worse for the industry than if they had just merged. I do not have a false hope that there is a new #2 or future #1 out there.

    But yes, for me, the most important thing is for DFS to survive. I am not a pro and do not ever plan to be a pro. I’ve made a small supplemental income off DFS the last few years but if it went away tomorrow, it would not change my life other than I would lose something that has been a big enjoyment/entertainment over the last almost 6 years.

  • bric75

    • 12

      RG Overall Ranking

    • Ranked #9

      RG Tiered Ranking

    I don’t think the narrative that the companies are having financial problems so they merged makes sense. Why because they both offer the same product?

    I think it is 1 and 5 from this list of reasons to merge. Synergy and to eliminate competition.

    http://www.investopedia.com/ask/answers/06/mareasons.asp

  • EadesScience

    @Stewburtx8 said...

    I am not a pro and do not ever plan to be a pro. I’ve made a small supplemental income off DFS the last few years but if it went away tomorrow, it would not change my life other than I would lose something that has been a big enjoyment/entertainment over the last almost 6 years.

    Bravo to you Sir….Well said and my sentiments as well.

  • ezreads

    I’m a just say this, Draftkings, it’s been fun but fanduel is on the rise. I believe FD can outlast DK in the end. I’m not making any and or all assumptions, guesses, etc . In my gut and my heart, FD is here to stay, DK will be dust in the wind should this merger not go through at all.

  • DefinitelyMiami

    @joeycis said...

    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.

    let them eat cake.

  • depalma13

    I really don’t care if they are struggling. They brought that upon themselves.

    They will sell out before they fail, or some company will buy their assets for pennies on the dollar if they do.

    I think the Seminole Indian Tribe would gobble one of them up in a heartbeat if the opportunity was presented.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @bric75 said...

    I don’t think the narrative that the companies are having financial problems so they merged makes sense. Why because they both offer the same product?

    Because as a merged company they could significantly slash their advertising budget instead of running ads in competition with one another. I also think the legal defense synergy would be important for them. They could cut costs that they both are paying currently while combining their legal defense budgets in the fight for regulation in many states where the legality is still a big question mark. The downside is they now have to fight the anti-trust issue if they want to continue to try to go forward with the merger.

    But both those things do fall within 1 and 5 that you listed. But I think the end goal is to significantly cut costs/expenses (current financial problem they both are facing) to allow them as a merged company to move forward with more ideas/innovation.

  • tmarohl

    They could also continue to raise entry fees and rakes, which they have been doing the last several months when they have been operating like they were going to merge. Now that they are not going to most likely merge it will be interesting if they start differentiating themselves again. It was all too predictable during NBA season, they would both have $8 tournaments for instance, and few smaller ones. The rakes were also higher than normal.

  • KindGuy

    Yahoo is surviving without stupid rake increases and price hikes?

    What is Yahoo doing that DK/FD aren’t?

  • sonic999

    Because Yahoo is willing to lose money on DFS to bring eyeballs to their other offerings. Has nothing to do with anything Yahoo is doing other than that. If Yahoo DFS had to survive as a solo entity it would have ceased operations already.

  • yisman

    @sonic999 said...

    Because Yahoo is willing to lose money on DFS to bring eyeballs to their other offerings. Has nothing to do with anything Yahoo is doing other than that. If Yahoo DFS had to survive as a solo entity it would have ceased operations already.

    I can attest to this.

    Yahoo DFS is like the WNBA.

    It’s not profitable (in fact, they’ve lost thousands) but it doesn’t need to be to stay in business.

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    @sethayates said...

    People that haven’t been around the DFS industry long forget that at one point DraftDay was the number two site. They were eventually surpassed by DK as DK kept pushing the envelope with overlay and an ad blitz.

    Seth, I believe you’ve confused DD for DS. :)

    I think you are spot on about the perceived market of DFS vs what’s actually being realized. Like many, I wasn’t thrilled with the merger. I also share the opinion that such a merger derived with the goal of surviving, rather than thriving. It does seem inevitable that DK and/or FD are doom to fail. I just hope neither take the industry down with them.

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    @sonic999 said...

    Because Yahoo is willing to lose money on DFS to bring eyeballs to their other offerings. Has nothing to do with anything Yahoo is doing other than that. If Yahoo DFS had to survive as a solo entity it would have ceased operations already.

    Some truth there, but Yahoo is also affiliate-free which is a huge part of operating costs. Most people either don’t realize or ignore that up to 40%(maybe more) of their rake goes to affiliates.

  • hautalak

    • x2

      2021 Blogger of the Month

    @ezreads said...

    I’m a just say this, Draftkings, it’s been fun but fanduel is on the rise. I believe FD can outlast DK in the end. I’m not making any and or all assumptions, guesses, etc . In my gut and my heart, FD is here to stay, DK will be dust in the wind should this merger not go through at all.

    I have never played FD and probably never will (unless I have to). What makes you think they are the ones that would last between the two? Just from everything I’ve seen in the forum it seems like a little more people play on DK than FD.

  • Jvanspro

    @hautalak said...

    I have never played FD and probably never will (unless I have to). What makes you think they are the ones that would last between the two? Just from everything I’ve seen in the forum it seems like a little more people play on DK than FD.

    I actually think it’s a pretty even split. I’m like you but play exclusively on FanDuel and FantasyDraft and don’t plan on ever creating a DK account.

  • hautalak

    • x2

      2021 Blogger of the Month

    @Jvanspro said...

    I actually think it’s a pretty even split.

    It probably is. Depends on what you like to play to I guess. FantasyDraft seems to be growing a bit though and I play there a bit. I’ve just found it tough to win often there for some reason.

  • YoungFischer

    I suspect changes will be coming. With the merger dead, raising new capital may become more difficult. FD/DK may need to re-think their business strategy from growth into a more sustainable business model. A lot is going to depend upon each site’s ability to control their costs moving forward. How much flexibility do they have in terms of marketing/sponsorships/affiliates/etc? Where can they cut costs? Lobbying/legislative costs can continue to be shared. There’s going to need to be a road map for turning a DFS site into a profitable business in the near future, something that has never before been accomplished by any company big or small.

  • yousif

    • Blogger of the Month

    @sethayates said...

    To be clear, I think a big part of the merger was FD/DK not wanting to take a “down round.” In reading that Axios article, FanDuel had $30M cash on hand at the end of 2016. If the article is correct (FD had no comment) then FD cut off talks about future funding assuming that they could survive on $30M.

    That Axios article says DK raised $100M after 2016 which I remember hearing elsewhere. At some point, the pressure is going to be on these companies to either make a profit or go public. The advertising blitz produced massive growth but my hunch is that there’s a smaller market for DFS than many want to believe.

    You can’t continue taking down round after down round and diluting the company down to nothing. Without this merger, one of these companies could possibly go under. People that haven’t been around the DFS industry long forget that at one point DraftDay was the number two site. They were eventually surpassed by DK as DK kept pushing the envelope with overlay and an ad blitz.

    It’s not a given that these two sites will remain #1 and #2 forever. Regardless of what the FTC does, they don’t drive our decisions as DFS players. If one site went out of business those players would either go to the other site or find a new #2.

    Exactly. The demand for DFS (whether or not DK & FD overestimated it) exists and it’s strong. If they go down, there’s room for plenty more companies to enter the market without having to spend the same as DK & FD (precisely because the demand and awareness now exists). There will always be DFS products to play as long as there’s demand.

    If that means rakes stay reasonable & there’s no monopoly to block new entrants, it is definitely great news.

    Like you said, at some point the pressure is on to become profitable or go public. Unlikely they would have gone public given the tremendous amount of losses they’ve been experiencing (DK operating loss of $92 million & 2016 EBITDA loss (Jan-Oct): $59 million for FD), so they’d have to work together to become profitable, a variable of which would definitely have included raising rakes.

  • yousif

    • Blogger of the Month

    @kaetorade said...

    Seth, I believe you’ve confused DD for DS. :)

    I think you are spot on about the perceived market of DFS vs what’s actually being realized. Like many, I wasn’t thrilled with the merger. I also share the opinion that such a merger derived with the goal of surviving, rather than thriving. It does seem inevitable that DK and/or FD are doom to fail. I just hope neither take the industry down with them.

    I don’t think they will. It seems obvious to me that certain sites have positioned themselves in preparation for DK & FD potentially going under. Yahoo & Paddy Power BetFair with their acquisition of DRAFT. Demand is strong, supply will follow.

  • yousif

    • Blogger of the Month

    @elementasrat yahoo also already owns eyeballs through it’s extensive network, including sports, which helps cut back on advertising spend

  • TheRyanFlaherty

    Saw the “which would survive” posts a few up, and was actually thinking about that last night…that question may be worth it’s own thread…but I actually think it would be DraftKings that would survive and it’s not even close.

    I don’t want to go on too long of a rant, bug some reasons…
    Just look at the MLB slates tonight. Draftkings consistently had later prize/player pools. They’ve also been the site that’s promoted the HUGE pay-days of late…which is big at attracting casual players.
    Speaking of casual players – they have more (and cheaper) price points and they added the Arcade games…they may not be for everyone, but it’s another choice for customers and more revenue for them.
    While it’s still an issue, at least DK had payed lip service to lineup sellers/sharing…again not that effective it has done some small things, like force you to put a few players in an optimizer, and anecdotely I’ve seen the lu sellers as a much bigger issue on FD.
    Not everything always works, but DK has tried new things like the Arcade and missions…the missions may suck at time, bug it’s a potential hook to new players and can be better than FD’s almost non-exaistent rewards.
    And a big one – When FD had made changes it’s almost always been in response to, or making their product more like DK’s…Not the other way around….you want to know who the leader is, who the alpha is…that may be the clearest proof.

    And while I didn’t type everything, that turned out to be quite a bit lol.
    Despite all that, it’s not meant as a love letter to DK…I think both companies have been inept and damaged themselves consistently, so because of that nothing would surprise me…but when I look at things objectively I ‘d have to say DraftKings is in the better spot.

  • madmanjayWV

    Looking at the financials DK is not even remotely close to being in a better spot, at least from what I infer.

    And in reference 2 a couple posts above —

    Daniel Wallach‏
    @WALLACHLEGAL
    Follow
    More
    Source: If the DraftKings/FanDuel merger was approved, original plan was to abandon the FD brand by 7/11 and migrate to DK platform

    If that doesn’t give you a nice, warm fuzzy feeling inside I don’t know what will. :(

    P.S. =

    https://twitter.com/WALLACHLEGAL/status/878302824819339264

  • whodat2

    @UncleRicoQB1 said...

    The two companies combined own 90% of the daily fantasy business.

    How and why was Sirius and XM allowed to merge?

  • X Unread Thread
  • X Thread with New Replies*
  • *Jumps to your first unread reply

Subforum Index

RotoGrinders.com is the home of the daily fantasy sports community. Our content, rankings, member blogs, promotions and forum discussion all cater to the players that like to create a new fantasy team every day of the week.

If you or someone you know has a gambling problem, crisis counseling and referral services can be accessed by calling 1-800-GAMBLER (1-800-426-2537) (IL). Gambling problem? Call 1-800-GAMBLER (NJ/WV/PA/MI), 1-800-9-WITH-IT (IN), 1-800-522-4700 (CO), 1-800-BETS OFF (IA), 1-888-532-3500 (VA) or call/text TN REDLINE 1-800-889-9789 (TN).