There was a time not too long ago when the hot property was Daily Fantasy. The two leaders in the space, Fan Duel and Draft Kings, were spending money as fast as they could raise their millions in what looked like an arms race to see who could be the more disruptive. For one glorious year for sales folks, especially on the broadcast side, a new leading form of revenue emerged; taking checks from the two big DFS companies as they fell over each other in advertising spends. Then the bottom dropped out. Loud, bold claims of large pools of cash and recklessness led to officials looking deeper into DFS and eventually laws changed which altered the landscape for the businesses. The ad money slowed, the buzz slowed, and as legal sports gambling questions started to rise, many thought the DFS bloom was off the rose. They still had big time teams and leagues as equity partners, but DFS was no longer that hot, and lots of retrenching needed to be done.
However those who have looked at the demise of DFS, and fantasy sports in general, may be in for a surprise because of the partners who have equity and are engaged in the space and because the fantasy space in general is still an area where millions of engaged fans, now more in the mobile space than ever before, still reside and engage.
You cannot turn on an NBA game, for example, without still seeing Fan Duel and or Draft Kings signage. NFL teams are still heavily involved in fantasy as an engagement tool. Oath, now the rollup of Yahoo, Huff Post, AOL and Verizon, remains a major player in the fantasy space for engaged fans, all of which number in the millions. Maybe it’s not 100 million as was once boasted about, but it is a solid passionate following. Now there was a time when you talked to conservative officials in the fantasy space and mentioned gambling and pay fantasy and they cringed. Fantasy is for the purists, the hard core fans, and that’s what will survive, many claimed. Fast forward to the fall of 2017, and the recent Sports Gambling USA event in New York (great summary here by colleague John Brennan) and you had a majority of the Americans in the room listening in who were involved in some way in the fantasy space; not daily pay fantasy per se, but fantasy operators and platforms, all now looking to learn and find a way in should and when sports gambling becomes legal in the U.S.
Why the change and why will the larger DFS companies maybe have a second life? Simple. Assets. While maybe the audience isn’t as large on a daily basis Fan Duel and Draft Kings have massive data on people who at one point, maybe not currently, have signed up to play. Other companies looking into the space may also have databases of those fans they have captured, and those databases are gold to anyone looking to engage in sports gambling when the spigot starts to get turned on. It was clear from those at the conference last week that while U.S. teams and leagues are looking into the space, watching closely and seeing how they will be positioned, nine have actively honed in on a structure or who the audience can be market by market. The large DFS players, as well as casinos who have spent money targeting consumers, are an easy first step of engagement into an engaged audience who may enjoy the benefits of large or small scale gambling. Teams and league sand media properties already have equity in both of the big DFS players, so name recognition and activation can be more seamless than with a betting house looking to come in and grab scale. Most importantly as the smoke clears in the DFS landscape, leadership has adapted to change, understands the marketplace better than those watching but not fully engaged, and they can continue to both activate and ramp up.
The secret to business success, especially in this crazy media environment we are in today, is to adapt and change as best we can. While many wrote off DFS in its past form, you still can’t avoid the names and the logos, and the new adaption of what those businesses are could make them well poised for not just a rest, but for an evolution as those in Washington and the states make some big decisions on unleashing the reins on the once taboo trove of sports gambling for the masses.
DFS was a gamble as a business; maybe that gamble will now pay off in a way not expected.
