BY JASON ABBRUZZESE
September 6, 2017
DraftKings CEO Jason Robins knows how people feel about how many ads they ran in 2015.
“It was just too much,” Robins said. “It was over saturation. People were complaining. They were seeing too many ads. It was beyond the level that I think is healthy and good for the long term.”
That said, get ready for round two. With the NFL about to start its 2017 season and daily fantasy ready to re-emerge from two years of controversy and regulatory battles, there’s a fresh push from daily fantasy websites on the way.
“Tell me what you think in a few weeks,” Robins joked.
Daily fantasy is ready for its comeback. A couple years after DraftKings and FanDuel burst on to the scene with an absurd amount of ads, the two companies are set to re-enter the public consciousness. Legal troubles are (mostly) behind them, a possible merger is dead, and ad budgets are restocked, though maybe not to quite the extent they were.
“It’s obviously been a verity turbulent two years but now [we’re] very well positioned for growth and certainly we’re very good on the regulatory side,” said FanDuel CEO Nigel Eccles.
“We still think it’s very early stages in daily fantasy sports,” Eccles said.
Turbulent might be putting it mildly. After the two companies outspent the beer industry on ads meant to attract new customers, a regulatory battled called into doubt whether fantasy sports for money was legal—and if it ever would be. States began to ban daily fantasy competition. The industry was also hit by a scandal that alleged employees of the two companies had colluded to win major prizes.
The controversy centered on the issue of money. Daily fantasy lets users pay money to enter competitions that then have cash payouts, not terribly different to online poker. Users choose teams of players based on pre-set salaries. Whichever teams score the most points by playing well in real-life games get a cash prize.
If that sounds like gambling to you, you’re not alone. Plenty of state governments and regulators felt the same way and began to crack down. The ads suddenly disappeared. The companies remained open for business, but stopped operating in numerous states and ceased running for-money competitions in others.
The companies eventually prevailed, with lobbying efforts successful in getting most states to legalize the game, but the damage was done. Weaker from their time on the sidelines and having already seen just how brutal competition could be, DraftKings and FanDuel explored a merger that was just about done—until the U.S. government’s antitrust regulator said in July that it would block the deal. The merged company would have had 90 percent of the daily fantasy market.
Now, it’s gametime. There’s fantasy (daily and season-long) for all sorts of sports, but the NFL reigns supreme. Hence the return of daily fantasy ads.
“This is the time of year when we have the most new customers join and customers that are NFL-only reactivate, so it’s very important that we have effective advertising,” Robins said.
To attract new customers, both companies are rolling out new game formats and promotions, such as a billion-dollar challenge from DraftKings to make the perfect lineup. The goal is to grow beyond the usual sports bros that are daily fantasy players and tap a larger population looking for a more casual and social experience. Regular fantasy sports typically last a whole season and are estimated to draw around 60 million participants, most of whom play through established companies.
“I view our principle competitors as ESPN and Yahoo. They by far have many more users than we do,” Eccles said.
Both Robins and Eccles—who at one time were going to be CEO and chairman of the merged company, respectively—said they believe daily fantasy is still in its early stages, and that coming up with new games and a better user experience will be key to future success.
“I think that the overall kind of product itself is still very much in the early stages,” Robins said. “It is to me the same as the first few years of when season-long fantasy hit the internet. It was just a different product than it is today.”
Let the games begin.
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