We all know a rake is necessary, but how much is too much? Consider a large, live poker tournament in Las Vegas with a $1,000 entry fee. It’s reasonable to assume that a 10% rake, while still a bummer to have to overcome as a player, is appropriate to cover the costs of running the tournament like paying the dealers, coordinators, space, and even profit pocketed by the casino. There are logistics that just aren’t free. So the players can swallow the $100 and tell themselves that they are good enough to beat the rake. Someone has to pay these dealers, right?
Now consider a Draftkings GPP. This Thursday night’s NFL $5 entry Kickoff Special guarantees $600,000 and will host 138,000 entries and guarantees a 1st place prize of $50,000!! Sweet, right? But wait…138,000 x $5 = $690,000. So DK will pocket $90,000 for “running” this tournament. That’s 180% of 1st place prize money!! Does that seem excessive? It sure as hell does to me.
This is the case for nearly ALL of Draftkings tournaments. It almost feels like a slap in the face that they actually win every tournament to the tune of a whole hell of a lot more than the actual “winner”. While I acknowledge there are costs to running Draftkings (I don’t know the numbers), and that they are a business out to make money in a free market (which I am perfectly fine with, yay capitalism), the logistical challenges of “running” each tournament do not compare to those of the Vegas poker tourney. Therefore, this level of rake seems unwarranted and greedy. Now, again, they are allowed to charge as much as they want in the beautiful free market of the USA, and the invisible hand of the consumers should dictate an appropriate rake, which I happen to agree with, but is the general player pool aware enough to react and make an impact? I don’t think so. It’s no secret that they are printing money. We can see that by the MASSIVE ad campaign we see every time we turn on our TVs, but I don’t think most players realize just how much DK keeps every time they buy into a contest. Further, shouldn’t DK, Fanduel, etc, as fellow fantasy lovers, cut out some of the greed and give some back to the players? Is 180% of first place money too much to keep EVERY day? I think so, and I think the first step to making an impact is raising awareness. Am I wrong here?