This football season was targeted as the one in which the daily fantasy sports (DFS) industry would get over the hump, the one in which the sites would finally attract enough customers to stop having to shell out overlay after overlay. And likely thanks to the non-stop ads from DraftKings and FanDuel, it looks like those hopes are finally coming to fruition. For the second straight NFL weekend, both leading DFS sites avoided posting overlay. In what may come as a surprise, one other site, Yahoo!, didn’t have to shell out any overlay, either.
DraftKings is Biggest, but FanDuel is Earning More from DFS Contests
According to DFS monitoring site SuperLobby.com, DraftKings just edged out FanDuel in terms of revenue by $150,000*, but FanDuel’s effective rake (the difference between total entry fees paid and total prizes out divided by total entry fees paid) was higher, 9.1 percent versus 8.1 percent.
This past weekend, Week 5 of the NFL season, both sites did it once again. DraftKings’ net revenue was $2,613,980, while FanDuel’s was $3,451,318 (thanks to Fortune.com for sharing SuperLobby’s figures). FanDuel also won the effective rake battle, 16.8 percent to 10.4 percent. DraftKing’s gross revenue was higher, though, $25 million to $20.6 million. It appears that endless advertising spending is working, even despite the recent data leak controversy.
Yahoo! is the DFS Mighty Mouse
While those two are the dominant players in the DFS industry by a large margin, one upstart has already seen its numbers climb into the black. Yahoo!, though an internet giant, only launched its DFS site this year and stayed fairly quiet in the advertising arms race, letting the two big boys raise awareness of the industry. Yahoo! is now the third largest DFS site, bringing in $1.3 million in entry fees this past NFL weekend and eeking out a $26,625 profit for a 2 percent effective rake.
Part of Yahoo!’s defeat of overlay may be thanks to the fact that it lowered the guarantee on its headliner “Million Dollar Baller” contest from $1 million to $750,000, but hey, if it brings in more players and allows the site to avoid overlay, it looks like a good decision. This coming week, the guarantee has been reduced to $700,000.
Yahoo!’s early success can likely be attributed largely to its built-in customer base. Yahoo! Sports is one of the most trafficked sports websites on the internet, so Yahoo! DFS already had a head start in at the very least gaining awareness. While it certainly hasn’t come close to the gross revenue numbers of the top two competitors, it also hasn’t had to spend gajillions of dollars (that’s a scientific measure) in advertising.
Fortune also notes that Yahoo! runs ads for DraftKings and FanDuel on its season-long fantasy app, so even when those two gain customers, sometimes Yahoo! gets paid for it.
*SuperLobby likely means net revenue in this case.