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  • fishcakeking

    FCK

    Is The DFS sky falling?

    Although I didn’t play volume on DS, the removal of them from the marketplace will likely hurt me and other dfs players. The rake at DK is considerably higher.(didnt stop me before) Besides that, having fewer people competing for our dollar will likely shrink things like deposit bonuses and overlay.

    These events were inevitable, but could signal a shift to a less profitable landscape for players.

    A year ago there was unbridled optimism for dfs. Reality has set in and I don’t like it.

    FCK

  • fightingjohn

    I don’t think there will ever be a time where a site is not in the red. With the increased big tourney’s and payouts it is costing the casual DFS player to spend more which they might not want to. Where is everyone hearing that ESPN, Yahoo…etc are going to get into the DFS busniness. I am intrigued I must say about this. The sky is falling in a inverse way. It was only a matter of time before a merger like this was to take place. If you want to survive and thrive in this world, you have to make a change and this could be a good change. But you better listen to your customer if you want to succeed. Without us players, you have nothing.

  • bripc23

    2013 PFBC Finalist

    I don’t see the argument that rake will go down since the industry now became less competitive

  • badtouch

    • Ranked #99

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    If every site is in the red including FD, DS, and DK, why is it that way? And what in the world is going to change to make it better? FD and DK are not startups, they have alot of traffic and never(in the case of FD) or hardly(in the case of DK) overlay.

    I get it that the rake is their revenue stream. But at 10-20% generally per entry, how is that not enough to get into the black? I sure don’t see anyone advocating that rake should be higher than it already is. In fact, it’s just the opposite. Every opinion I’ve seen expressed on rake is that it is ok where it’s at or needs to be lowered.

    Now, I’m no insider and may have an overly simplistic view of the industry but what exactly is the real problem with profitability? And why is it universal to all of the sites? Now, the smaller sites I can understand there being a problem with lack of traffic generating an existence level of revenue.

    But looking at the big 2 now in FD and DK, I have a hard time seeing what is holding them back from turning a profit. Just looking at a handful of the tourneys on FD and DK and calculating the rake, this amount is substantial every day and I can only imagine what the number is when you add in the rake from all games. It certainly makes me wonder how much each of their light bills must be so to speak to keep them in the red.

    Now, granted you have things like advertising which I know isn’t cheap. Acquiring new players is I gather the #1 goal of the sites still at this point and there is a cost attached to that from bonuses, referrals and the like. But how big of a bite are we talking about here?

    The referrals are a big wild card for me. I have exactly one and I think he generated about $3 per month for me last half of last football season. So I have no idea the extent of the payout for this. FD for example has a 20-35% referral structure. Even if FD lost 20% of its rake for every single player, there is still a substantial amount of rake generated each and every day.

    I guess the big issue for me is if in fact, all of the sites are losing money including FD and DK(which I just find hard to believe still), something is going to have to change or this thing of ours is going to die off. You can only keep pouring money into a hole for so long. Eventually, you run out of money.

    Is the answer simply more people need to be playing and if so, what’s the magic number? Twice the number now or 10x the player now.

  • everettcase

    @bripc23 said…

    I don’t see the argument that rake will go down since the industry now became less competitive

    StatClash having lower rake hasn’t helped them much in their fight against FD and DK. If DK and FD are on even footing in most other aspects, rake is one way they can compete with one another… quality of competition is often more important than quantity of competition when it comes to business decisions like that. For example, Microsoft wasn’t losing much sleep when you could get Linux for free, but they’ve gotta be awful nervous now that Apple’s pledged that all future OS upgrades will be free.

    Not saying that will happen, but that’s the argument for how rake COULD get lower if there is true competition between DK and FD.

  • hambazaza

    RG Blog Program Manager, 2014 RG Party Beer Pong Champion

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    @alsmizzle said…

    If we’ve learned anything about DK and FD, it’s that they don’t collaborate on anything.

    very good point, but i think moving forward i wouldn’t be surprised if they do. monopolies form for a reason, they benefit the person making the product and hurt the consumer. if a duopoly exists in DFS then they will be best served by working together to make sure they even out the market share and each can get an even share of the ever expanding pie. now, if they each believe that only one of them will survive prior to the big dogs espn/fox/whatever enter the dfs arena, then they’ll continue fighting this battle with one of them (if not both) likely dying before its all said and done.

    i could also (and might very likely) be very wrong.

  • everettcase

    @badtouch said…

    Now, granted you have things like advertising which I know isn’t cheap. Acquiring new players is I gather the #1 goal of the sites still at this point and there is a cost attached to that from bonuses, referrals and the like. But how big of a bite are we talking about here?

    The absolute biggest of bites.

    My guess is that advertising is the primary reason sites are not profitable. They are playing the long game, sacrificing immediate profitability for long-term growth… I obviously haven’t seen DK’s financials, but if it’s true that they’re in the red (which I believe), it’s because they haven’t focused yet on profitability, and the venture capital they’ve raised allows them the runway to continue to operate that way. It’s actually incredibly common practice. Not saying that it will or won’t work (worked for Twitter, not so much for Foursquare, to use recent examples) but it’s not necessarily cause for concern.

  • badtouch

    • Ranked #99

      RG Tiered Ranking

    Yeah, I can see that. And to be clear, I’m not glooming and dooming the industry. I think it’s growing with massive potential for booming, perhaps not as big as online poker but just the numbers of people who play season long who could make the jump to DFS is staggering.

    While I am troubled and disappointed by the shuttering of DS and the supposed lack of profitability of the sites, I still see it as inevitable that DFS is going to get bigger and bigger perhaps even massively so.

  • headChopper

    RG Contributor (OG Status)

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    @bripc23 said…

    I don’t see the argument that rake will go down since the industry now became less competitive

    I think this industry just got more competitive. DS wasn’t causing either of the big 2 sites to lose any sleep. But you combine them with DK and now FD has to take notice. FD was walking away with market share and now this puts DK in a much better spot to compete with them for the #1 spot long term.
    This whole rake thing isn’t going to play out overnight anyways. These sites need to start turning serious,consistent profits before they can/will think about attacking the rake against each other.

  • Dogstraightup

    Curious what your source is? Also find that hard to believe as others have said.

  • headChopper

    RG Contributor (OG Status)

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    And I think we see the beginnings of the very competitive back and forth between 2 titans, as opposed to an easy #1 followed by a distance 2nd and even more distant 3rd.

    /threads/New_FanDuel_Promos_25_000-337767

    then this:

    /threads/New_DraftKings_Promos_25_0-337918

  • fishcakeking

    FCK

    Very little can be known until we see the promo announcements for nfl. Both deposit bonuses and championship size. We can look at them year over year and see where we are.

    Dk and Ds combining will likely not benefit the players in the short or long run. Doesn’t mean the sky is falling… that was just meant to have a little fun with the current climate… and the fact it’s all star break.

    FCK

  • everettcase

    @fishcakeking said…

    Dk and Ds combining will likely not benefit the players in the short or long run. Doesn’t mean the sky is falling… that was just meant to have a little fun with the current climate… and the fact it’s all star break.

    Seems to be benefitting players in the short run pretty immensely so far.

  • fishcakeking

    FCK

    I stand corrected. The initial reaction by fd and overreaction by FD is definitely in players benefit.

    Not sure how DK can stop you from gaming the system. I intend on withdrawing from my fd account and depositing in dk. Then just redepositing on fd. Everybody wins because I’m a fish.

    FCK

  • fishcakeking

    FCK

    Oh hi there. Remember me.

    FCK

  • Jeff7kv

    .

    Reminds me of a political forum, bunch of ppl who don’t truly know what the situation is, just want to banter their opinion on the matter. I’d want to hear it straight from an economist’s mouth, is DFS on the rise or falling?

  • ActionJunkie

    1%:30% = sky isn’t falling… it’s just beginning to open up ;).

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