Will Daily Fantasy Sports Overthrow Online Poker?
8 years ago11 Sep
There is a booming gambling market in the US right now, one which is equal parts legal and exciting and⌠doesnât involve cards at all!
Iâm talking of course about the Daily Fantasy Sports (DFS) market, where punterschoose their favourite fantasy line-up across different sports and gain points â and ultimately cash â based on their teamâs performance.
With DFS betting taking place over just one day, a weekend, or at most a week, the âreal-timeâ enthusiasm - coupled with the ever-increasing rewards - has seen a boomwhich has been compared to that of online poker at its height. But is that a fair assessment? Letâs take a closer look at the comparisonâŚ
Regulation and legality
Daily (sometimes referred to as Digital) Fantasy Sports is almost exclusively a US phenomenon, where sports betting is otherwise illegal. This opportunity to wager on sports for real money has caught the imagination of Americans, but has made little headway in other markets where gamblingon sports has a long (and legal) history.
Currently DFS enjoys a quasi-legal status, the majority of US states allowing it because of the âelement of skillâ involved â it is not generally considered to be gambling. However, as the poker world has already learned to its cost, such opinions are subject to change; restrictive legislation â or conversely the loosening of laws â could be just around the corner.
So, DFS could face a future tightening of its current status and face serious problems or find itself in a fight with poker (and sports betting, though less likely) for the gambling market. If it plans to challenge poker in terms of player interest and dollars over the long-term, DFS would almost certainly have to find a popularity base elsewhere â so far that looks highly unlikely.
Google says no
One method of uncovering the popularity rise is to compare the number of Google searches for a specific term. Fan Duel and Draft Kings â two of the most popular DFS sites â barely scratch the surface compared to PokerStars. What âGoogle interestâ there is can be partly put down to news and investment searches rather than actual âend-usersâ â such a spike in interest can also be seen back in 2011 when Black Friday hit the poker world.
In addition, if we look at the favourite online community for DFS â Rotogrinders - we again see a marked difference between the DFS and poker sectors when it comes to âgooglingâ. Poker has a plethora of well-trodden forums, despite phrases such as 'poker strategy' being almost unsearched for in the US because of legal issues.
Rotogrinders, naturally, are not facing that same problem and still cannot match even one popular poker forum â dominating DFS doesnât mean that a challenge to poker for âhearts and mindsâ is even remotely close to happening.
Money talks
FanDuel, the largest site in the DFS industry, hasnât made any money yet! This remarkable statement might surprise some who have seen the rise of DFS as the âgamblerâs saviourâ in the US, but it is a fact. According to New York-based bizjournals:
âFanDuel is not profitable due to its large marketing budgets. While interest and revenue is exploding, the Daily Fantasy Sports game depends on continual user growth to eventually get into the blackâ.
Poker companies never suffered from significant early years issues or negative cash flow.
Along with DraftKings and lesser names, we are basically talking about very popular start-up companies, where investment is crucial to developing brands and forging a place in the market. Paid active users across DFS continues to rise impressively, but FanDuel annual revenues of around $50m are dwarfed by the $1.4bn of PokerStars.
This yearâs figures will make interesting reading, but remember also that the US has a sports season, and outside of these, revenues are likely to be lower. Poker, naturally, is a year-round, non-stop, world-wide phenomenon â if it re-enters the US in a significant way it has a natural - and massive - advantage.
Conclusion
DFS are a hugely popular pastime and are growing massively in the US, but they are still in their infancy and need careful nurturing and expensive feeding. If poker (or sports betting) can find increased state, or the hoped-for federal regulation, DFS will take a massive hit.
For the moment they are safe, but the future is uncertain â who will be sharing their nest and where can they go if the bigger birds start pushing them around?
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