Draft Kings, Fan Duel, And The Business Behind The Game
Fantasy football is becoming more and more popular in the United States. With over 1 million participants on daily fantasy football sites including FanDuel and DraftKings and with more money being wagered each year, people are putting in more and more time to get the best lineup they can possibly get.
FanDuel and DraftKings are daily fantasy sites that make up about 90% of the industry where people can play for entertainment reasons or for monetary reasons. They are both valued at over $1 billion dollars each. "Those two companies have raised more money in the past year than in the history of the fantasy sports industry combined," said Paul Charchian, president of the Fantasy Sports Trade Association. According to bloomberg.com, In 2014 FanDuel had around 1 million active users. FanDuel paid out $564.5 million dollars in prizes last year and generated a profit of $57.3 million dollars. This was an increase from just $14 million dollars in 2013. DraftKings on the other hand had 200,000 active users in September and October and paid out 200 million dollars in prizes last year. FanDuel pays out about the top 10 percent of its users in large tournaments, while DraftKings pays out about its top 20 percent of its users in large tournaments. That means that 90% of the users in large tournaments on FanDuel don't get paid, and 80% of the users in large tournaments on DraftKings don't get paid. In head to head matches, the top 50% of the people win money, but not as much money as big tournaments. A lot of people playing on these two sites lose their wager. Most leagues on FanDuel cost somewhere between $1-$25 dollars. The bigger stake competitions can run from $2,000 dollars and up. Fanduel and DraftKings make their money by taking 10% of the entry fee of each contestant, the rest goes to prizes. A New York Times reporter interviewed Gabriel Harber(a well-known D.F.S. podcaster and writer who has worked in the D.F.S. industry since its inception). He said, “The idea that these sites exist so that regular guys can make a lot of money playing daily fantasy sports is a lie.” According to DraftKings data obtained by the New York State attorney general’s office, between 2013 and 2014, 89.3 percent of players had a negative return on investment. This statistic is based on all daily fantasy sports, but includes fantasy football which receives the most users, and the most money wagered. Also, according to a paywalled survey of 1,400 DFS players that Eilers Research shared with Tech Insider, 70% of fantasy sports players report losing money. "In the first half of the 2015 MLB season, 91% of daily fantasy sports player profits were won by just 1.3% of players," according to Eilers Research. Even though this is regarding fantasy baseball, this also applies to fantasy football because it has the same concept as fantasy baseball, and has the same companies running it. Another stunning fact is that FanDuel and DraftKings will bring in a combined $60 million dollars in entry fees in the first week of the NFL season, according to Adam Krejcik, a partner at Eilers Research. Sports books in Las Vegas are expected to handle about $30 million.
Fantasy football can lead to payouts, but you can still lose money on these sites. Fantasy football participants beware, you might be putting in a lot of time for little or no monetary return.
FanDuel and DraftKings are daily fantasy sites that make up about 90% of the industry where people can play for entertainment reasons or for monetary reasons. They are both valued at over $1 billion dollars each. "Those two companies have raised more money in the past year than in the history of the fantasy sports industry combined," said Paul Charchian, president of the Fantasy Sports Trade Association. According to bloomberg.com, In 2014 FanDuel had around 1 million active users. FanDuel paid out $564.5 million dollars in prizes last year and generated a profit of $57.3 million dollars. This was an increase from just $14 million dollars in 2013. DraftKings on the other hand had 200,000 active users in September and October and paid out 200 million dollars in prizes last year. FanDuel pays out about the top 10 percent of its users in large tournaments, while DraftKings pays out about its top 20 percent of its users in large tournaments. That means that 90% of the users in large tournaments on FanDuel don't get paid, and 80% of the users in large tournaments on DraftKings don't get paid. In head to head matches, the top 50% of the people win money, but not as much money as big tournaments. A lot of people playing on these two sites lose their wager. Most leagues on FanDuel cost somewhere between $1-$25 dollars. The bigger stake competitions can run from $2,000 dollars and up. Fanduel and DraftKings make their money by taking 10% of the entry fee of each contestant, the rest goes to prizes. A New York Times reporter interviewed Gabriel Harber(a well-known D.F.S. podcaster and writer who has worked in the D.F.S. industry since its inception). He said, “The idea that these sites exist so that regular guys can make a lot of money playing daily fantasy sports is a lie.” According to DraftKings data obtained by the New York State attorney general’s office, between 2013 and 2014, 89.3 percent of players had a negative return on investment. This statistic is based on all daily fantasy sports, but includes fantasy football which receives the most users, and the most money wagered. Also, according to a paywalled survey of 1,400 DFS players that Eilers Research shared with Tech Insider, 70% of fantasy sports players report losing money. "In the first half of the 2015 MLB season, 91% of daily fantasy sports player profits were won by just 1.3% of players," according to Eilers Research. Even though this is regarding fantasy baseball, this also applies to fantasy football because it has the same concept as fantasy baseball, and has the same companies running it. Another stunning fact is that FanDuel and DraftKings will bring in a combined $60 million dollars in entry fees in the first week of the NFL season, according to Adam Krejcik, a partner at Eilers Research. Sports books in Las Vegas are expected to handle about $30 million.
Fantasy football can lead to payouts, but you can still lose money on these sites. Fantasy football participants beware, you might be putting in a lot of time for little or no monetary return.