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  • biglucky

    • x2

      2016 DraftKings FBWC Finalist

    • 2016 DraftKings FGWC Finalist

    Getting very expensive to play DFS now a days…Looking at today’s NBA contests on DK. They’re taking a $54k cut out of a $400k prize pool (1st pays $50k). Is this the new norm? Do we really think this is sustainable? Is it not possible for the big site’s to operate at 10% or less on the rake? I feel that a site like FantasyDraft could really make some strides if they were willing to up there tournament offerings and offer their product at 10% or less. People can’t be happy seeing that sites like DK are now taking more than 1st place money to run the tournament. Is 1st place money for the sites in every tournament here to stay?

  • shockermandan

    • Moderator

    @biglucky said...

    Is this the new norm?

    Yes, it is the new norm. I’m not sure about that rake rate (13.37%) on the $40 buy-in (which I think is what you’re referring to) but the rake of the $4 (14.97%) is consistent with what it has been for a while.

  • thedude404

    • 2015 FanDuel NBA Playboy Mansion Finalist

    @biglucky said...

    Getting very expensive to play DFS now a days…Looking at today’s NBA contests on DK. They’re taking a $54k cut out of a $400k prize pool (1st pays $50k). Is this the new norm? Do we really think this is sustainable? Is it not possible for the big site’s to operate at 10% or less on the rake? I feel that a site like FantasyDraft could really make some strides if they were willing to up there tournament offerings and offer their product at 10% or less. People can’t be happy seeing that sites like DK are now taking more than 1st place money to run the tournament. Is 1st place money for the sites in every tournament here to stay?

    Rake has to do with the size of the player pool. Sure, there might be the occasional influx of players such as when a state (specifically Texas) legalizes DFS. But that will be shortlived as those players lose. What about when fd and dk merge? That seems like a logical reason for rake to decrease. After all, the main reason these companies are merging is to cut costs, right?. You actually think the new company will cut rake? Not very likely.

    So to answer your questions is this the new norm? Yes. Is it sustainable? No. The boom is over. People have wised up to the fact that if you play DFS, the odds are overwhelming that you will lose money. Why bother with DFS when you can bet on a game for the same amount and at least theoretically, have a 50% chance of being correct and if you are including standard juice, it takes around a 55% winning percentage to be profitable.

    Now when you look at the fact (according to DK’s own stats) that the top 1% of DK players are responsible for 47% of the money won and that only roughly 14% of players are net winners, you have a recipe for disaster. The ecosystem that DK and FD is completely unsustainable over the long run as the top 1% continues to suck all the money out of the system. Add to that it may very well be that sports betting will be legalized in the near future. I originally thought the legalization of sports betting would attract more people to DFS as the legalization would further legitimize DFS. Now I’m not so sure that this would bring in more players to DFS. You have to remember in sports betting all you have to do is predict something correctly. In DFS you have to predict something correctly AND have the added burden of beating other players trying to do the same. In other words, you can still make accurate predictions and STILL be a losing player.

    The big attraction to DFS I guess for most people is the “big score” instead of long term profit. I guess the question you have to ask yourself is over time, will you be more profitable putting 50 $20 entries in a DFS contest or making $1000 in sports bets. I dont have any statistics to back this up, but I think for the average person, they would lose less money over time with $1,000 in sports bets rather than playing DFS. It would be interesting to see somebody do a study on that.

    So to sum up after getting slightly off track, I believe DFS will always be around, but the glory days are long gone and lower rake is most likely only something that we can dream about . This can be attributed to several factors: 1. Short term driven greed by fd/dk 2. Not knowing how to run a business ie using spite as a reason not to merge earlier 3. inability to accurately predict the future market based on current business decisions 4. more consumers becoming informed about what a racket dfs actually is, both from a rake perspective and top players controlling the win/loss rate (which was enhanced by the sites enabling people cheating a few years ago).

  • thedude404

    • 2015 FanDuel NBA Playboy Mansion Finalist

    I cant edit my post for whatever reason but i would like to add instead of saying “Rake has to do with the size of the player pool.” I would have liked to say “Rake is determined by the size of the player pool and business costs” and I would also like to add in reason #5 which is a “stagnant or decreasing player pool over time”.

  • Bigo1

    I noticed another rake increase yesterday when I looked at Triple Ups and Multipliers.

    I guess management at the sites know it. Surely the only explanation is a shift in their strategy to go from a poker/gambling ecosystem (top 10% makes money, majority loses a little, some loses a lot) to social gaming where people just play for fun (or exchanging money privately)

  • Cpjttogether

    Rake should be 5% cash and 8% Gpp to compete with sportsbook straight wager and parlay options. The Dfs product can be better than the sportsbook product. higher rake to cover the lawyer fees, from the mistakes they made in the beginning is the opposite of what they should do. Its a short term vision and they are selling there self short. If they could figure out away to level the playing field without the korny identical line ups and show the fans more appreciation everyone would come back. Are they really going to have a horse racing rake +taxes and not listen to the passionate players who care? If it all collapses somebody is going to steal there idea and fix it. Hire me.

  • qatman

    @thedude404 said...

    Add to that it may very well be that sports betting will be legalized in the near future. I originally thought the legalization of sports betting would attract more people to DFS as the legalization would further legitimize DFS. Now I’m not so sure that this would bring in more players to DFS.

    The day sports betting is legalized is the last day I will ever play DFS. And I have played DFS just about every day for 4 years.

  • mrchuffy

    I wish they would at least make minimum cash in GPP double your entry fee.

  • MrFantasy

    @Cpjttogether said...

    Rake should be 5% cash and 8% Gpp to compete with sportsbook straight wager and parlay options. The Dfs product can be better than the sportsbook product. higher rake to cover the lawyer fees, from the mistakes they made in the beginning is the opposite of what they should do. Its a short term vision and they are selling there self short. If they could figure out away to level the playing field without the korny identical line ups and show the fans more appreciation everyone would come back. Are they really going to have a horse racing rake +taxes and not listen to the passionate players who care? If it all collapses somebody is going to steal there idea and fix it. Hire me.

    It’s easier said than done. If they aren’t profitable at these rake levels how will they get by on less? I’m sure they have data that shows people won’t play more money each night if they charge less.The industry is definitely going to be hurting if rake doesn’t come down.

  • Cpjttogether

    It is absolutely mind boggling how they are not profitable. How can everyone be losing at the same time? did they spend all the profits on commercials and lawyers? There’s no horses to feed jockeys to pay or race track to maintain . why is the rake so high? Get a answer if its legal or not and go public. Id still by stock in dfs. Its potential is still unrealized. Its a awesome idea with a few exploited weaknesses that can be fixed. As for sport betting being legal, it is and maybe its time for dfs to negotiate with the silver state and team up with people who can help?

  • Messiah717

    The operators hurt themselves by not knowing how to run a business. Frat boy mentality ruled the rhelm instead of a long term business view. Mind you these same people were intrusted with huge sums of money from investors and partners. They want to see a return on these investments. Add to this it taking a scandal for them to realize employees shouldn’t be playing in the contests.

    In addition to the rake another big issue is the top heavy payouts. You can hit a big score and still end up winning not all that much. That’s why most just keep losing money long term. As was mentioned above you either get lucky and hit a big one or contribute money everytime you play. This has become and always was a game for people with a large bankroll who can multienter various contests on a nightly basis. If they can get a ROI of 5-10% they’re happy. The rest of the 90+% are throwing darts and looking to get lucky.

  • tvsfrink

    The rake should be whatever they feel they can get their customers to pay without losing them, no different than any other business.

  • RangerC

    @Cpjttogether said...

    Rake should be 5% cash and 8% Gpp to compete with sportsbook straight wager and parlay options. The Dfs product can be better than the sportsbook product. higher rake to cover the lawyer fees, from the mistakes they made in the beginning is the opposite of what they should do. Its a short term vision and they are selling there self short. If they could figure out away to level the playing field without the korny identical line ups and show the fans more appreciation everyone would come back. Are they really going to have a horse racing rake +taxes and not listen to the passionate players who care? If it all collapses somebody is going to steal there idea and fix it. Hire me.

    Rake IS 5-6% at the 500 and up level, 9-10% at the $100-300, 12-13% at the $20-33 level, and then 15% at the cheaper levels (insanely bad). If you’re a top-tier pro playing ~25K worth of tournaments a slate (just using PGA as an example) you pay under 10% aggregate for the slate (and you don’t necessarily have to max out to get there – you can still get 9% playing 8K or so if you avoid the Dogleg). The rake increase hurts pros but they still play at a sustainable rate (not to mention all the perks they get). Casuals/fish don’t care if the rake in the $3 is 5, 10, or 15%. The midtier player is the one who is completely killed off. If you play $530 worth of entries at the $1-33 level you pay up to ~$80, while it costs $30 for a $530 entry. I emailed DK after the Open Championship last year to ask why I paid $90 for my $600 worth of entries, while it costs $81 for a $1500 tournament. No response.

    BTW, want to know why DK loses money despite charging exorbitant rake for a mediocre product? Look at their EPL product. They pay MILLIONS for team partnerships with clubs like Liverpool (having ads shown at Anfield is ridiculously expensive) but yet always make their tournament slate so small that it fills 40 minutes before kickoff some weeks (and in soccer you can’t really make a ton of LUs until team sheets are out), So millions in advertising but won’t take the 5% risk of a couple hundred in overlay to build the product organically.

  • TheRyanFlaherty

    @tvsfrink said...

    The rake should be whatever they feel they can get their customers to pay without losing them, no different than any other business.

    Unlike many other services, they also benefit from the fact that there is a portion of the player base who doesn’t even know what “rake” is, much less how to calculate it.

    I’m well aware of the mistakes these sites have made, but I still agree with the post a few up…it’s mind boggling that they’ve messed things up, when you consider they essentially have legal (in most states) sports gambling.

    I won’t rant about anything else because it’s not really on topic, but all these things seem to lead in to one another.
    The rake definitely does suck..personally all these small things have added up to turn me from making a small profit to a losing player, DK it’s effected the amount I play.
    I do hope the merger goes through, because I think that could help, at least short term. And hopefully allow a better #2 to emerge, but I know that’s likely wishful thinking.

  • dude_abides7

    @Cpjttogether said...

    Id still by stock in dfs. Its potential is still unrealized. Its a awesome idea with a few exploited weaknesses that can be fixed.

    That can be fixed. The problem is, they won’t be.

  • bradizpro

    • 2016 FABC Finalist

    Stretching every dollar they can

  • Cpjttogether

    good stuff ranger c. 5 % cash and 10% gpp is fair because of the action you get, with multiple players from multiple games. The problem in high stakes h2h and gpp isn’t bankroll. Lots of sports fans have money . But why play high stakes against people who have a big mathematical advantage against you? Then the problem is why handicap and research several hours to play low stakes? So you get people buying line ups and playing the same optimized few combinations. So then the problem is, its not skill now its gambling. so there are two problems. theres to much skill then theres not enough skill. As for the aggressive advertising. It was great to make the few high skilled players with computer tool advantage $ at first. But now who are they advertising to? The players who got annihilated and now have a better chance, if they become clones? Anyway blah blah. Who am I? I’m just a passionate professional gambler for 20 + years. I’m not rich, I do not know people in powerfull positions. but I call it how I see it. In my opinion Its gambling, keep it real, call it what it is, team up with Nevada and lets fix this wonderful game.

  • Bigo1

    @TheRyanFlaherty said...

    The rake should be whatever they feel they can get their customers to pay without losing them, no different than any other business.

    It depends how you define ‘losing them’.

    In the short term, the impact of a rake increase is close to negligible, DFS contests will still fill easily, very few players will purposely avoid contests with too high rakes (although there are more and more players doing so).

    However, the long term impact is significant. There are more and more discussions about how difficult DFS has become, that it is almost unbeatable. Even on RG, those threads occur more and more regularly. If most players feel they have no chance anymore, they will give up.

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