With millions of monthly visits to the Daily Fantasy Sports (DFS) sites and apps FanDuel and DraftKings, the question remains whether this new breed of online companies and their growing fanbase are in for the long haul.
Gambling by Any Other Name
While office brackets for NCAA college football and basketball tournaments have been a nationwide tradition for decades, nobody has ever been successfully prosecuted for betting in office pools. DFS websites take traditional betting to another level, calling it by another name.
Alluding to DFS operations as games of “knowledge and skill”, FanDuel and DraftKings take advantage of an apparent exemption under federal law that would have otherwise classified their operations as online gambling. The millions upon millions of visits to these sites each month are an indication of the public’s interest in winning money based on their, eh, varying degrees of “skill.”
The growth of these startups has been phenomenal. New York-based FanDuel averages 52.1 million monthly U.S. visits to its website, 53.6% of them coming from mobile devices. Massachusetts-based Competitor DraftKings averages 30.3 million monthly U.S. visits, with 50.2% of those being mobile. Yahoo’s apparent jealousy prompted the tech veteran to make a late entry into the game in July.
FanDuel’s traffic spiked in October after college and pro football seasons started, while DraftKing’s decreased. Although a DraftKings employee reportedly made $350,000 in late September from rival site FanDuel, the media attention does not appear to explain the sudden changes in traffic between the two competitors.
A state-by-state breakdown of visits to FanDuel and DraftKings reveals that both sites’ traffic is highest in California, New York, Texas and Florida. SimilarWeb’s research shows that even traffic from states that ban daily fantasy sports — e.g., Washington and Arizona — is significant. The New York Attorney General’s directive to both FanDuel and DraftKings to cease betting activity effectively means both players face an immediate loss of business in New York with grim long-term prospects to sustain the business.
An estimated 0.15% of Android devices in the U.S. have either the FanDuel or DraftKings app installed. With some 76 million American Android users in 2014, these numbers are not insignificant. This is especially the case when 25% or more of the apps’ users play at least one of the fantasy gaming apps daily.
DraftKings and FanDuel have media advertising deals and partnerships with professional sports leagues, which are now reevaluating the business relationship given regulatory investigation. However, these deals haven’t resulted in sending the two DFS sites much Web traffic. High levels of direct traffic (30 – 40%) appear to have come from a combination of heavy TV ads and repeat users.
DraftKings has an exclusive partnership with ESPN that sent it 9.4% of all U.S. online referral traffic in the last six months. Other DraftKing partnerships have not been as fruitful: Major League Baseball accounted for just 2.1%, NASCAR 0.54%, Ultimate Fighting Championship 0.6%, and the National Hockey League a minimal 0.14% of DraftKings referral traffic.
FanDuel’s exclusive partnerships with 13 NBA teams managed to send the DFS company just 0.15% of all its referral traffic over the last sixth months. Adult websites, however, sent FanDuel 6,600% more referral traffic during the same time period.
FanDuel received more traffic than DraftKings over the last six month from pop-up and pop-under ads. While pop-up and pop-under ads can be relatively cheap, they can also be incredibly annoying, ultimately detracting from a company’s brand.
In October, FanDuel’s big traffic increase over DraftKings appears to have come from serving millions upon millions of these ads.
The quantity of low quality ad traffic that both DFS sites are buying may help spur their short-term growth, but won’t be able to sustain their long-term survival — especially if U.S. state and federal authorities are looking to shut their businesses down.
Additionally, the fact both FanDuel and DraftKings are getting traffic from states that expressly prohibit their operation demonstrates the extent of consumer demand for DFS games. Only time will tell if this demand will be regulated or even prohibited by state and federal authorities.