After a poor week of entries into its Millionaire Maker event, DraftKings has reduced the prize pool for its marquee contest, prompting some to suspect that fantasy gamers may be losing interest, despite the huge top prize.
The Boston-based DFS site has promised to name a new fantasy millionaire every week in its radio and television ads, and the Millionaire Maker contest provides a big number at the top of the prize chart to attract new customers. But the contest’s payout structure may have lost its appeal to the average DFS gamer.
Decreasing Prize Pool
Over the first two weekends of the NFL season, the Millionaire Maker saw decreasing interest from daily fantasy players, as over 520,000 entered in Week 1, while just over 426,000 entered in Week 2. This drop in entrants resulted in the site losing out on nearly $1.9 million in entry fees from week to week, and only recouping 85% of the prize pool for the tournament (and likely more, as the site awards free event tickets to new customers, and also offers promos and giveaways on social media to help fill overlaying events).
Clearly, that signaled to the site that a change was needed. DraftKings has posted its Week 3 NFL Millionaire Maker contest, and it features a smaller prize pool of $7 million, and a reduced entry limit of just over 400,000. Previous iterations of the contest in Weeks 1 and 2 featured over 570,000 potential entries and a prize pool of $10 million. The maximum amount of entries from any one player, 500, remains the same in Week 3.
This means the top prize has dropped from $2 million to $1.2 million, and the entrant who finishes second will now receive $500,000 instead of $1 million. Everyone who finishes in the top 300 will receive at least $1,000.
Here’s a look at the payout structure from the first two weeks as compared to this week.
|Week 1-2||Week 3|
|7th – 8th||$75,000.00||7th – 8th||$50,000.00|
|9th – 10th||$50,000.00||9th – 10th||$40,000.00|
|11th – 12th||$40,000.00||11th – 12th||$30,000.00|
|13th – 14th||$30,000.00||13th – 14th||$25,000.00|
|15th – 16th||$25,000.00||15th – 17th||$20,000.00|
|17th – 18th||$20,000.00||18th – 20th||$15,000.00|
|19th – 20th||$15,000.00||21st – 25th||$12,500.00|
|21st – 25th||$10,000.00||26th – 30th||$10,000.00|
Changing the Payout Structure
As you can see above, the top of the pyramid is quite lucrative for the elite who finish with top scores in these contests, but for every lineup outside of the top .01%, the returns for a good day of daily fantasy are diminishing. During the first two weeks of the season, only 4.4% of users doubled up their entry fee, while in the Week 3 contest, a slightly improved 7.5% will be able to earn back twice what they entered. A finish in the top 2%, an impressive feat in any contest, only returned a prize of $50 in the first two weeks, and would earn a prize of $60 in Week 3.
This limits the potential return on investment for the average daily fantasy player, as only a fraction of a percent are seeing a significant multiplication of their entry fee.
User “tianyihe” on the RotoGrinders forums joined in on a discussion about the payout structure, noting that despite “cashing 50% of my Milly Maker [entries],” they were currently “sporting a cool -36% ROI.” User “rgyanks” added, “As it currently stands, you can finish better than 98% of the field and all you get to show for it is to triple your money… Until [they improve the payout structure], I’ll continue to throw one bullet in there and go to other sites for the rest of my action.”
Other DFS players in the thread mentioned that many of DraftKings’ other contests across multiple sports feature similarly top-heavy payout structures at lower levels. But as user “huitcinq” points out, the higher the entry fee, the flatter the payout structure becomes.
It’s clear that DraftKings is attempting to appeal to new, casual customers by holding these big contests with life-changing top prizes. But at what point are they focusing too much on new users, and ignoring regular gamers who play every week and want to enter contests with big prize pools with more balanced payout structures?
The folks at DraftKings are trying to strike a balance during this period of exponential growth and acquire new customers through their busy marketing campaigns. But they have to find a way to retain the average player who isn’t a shark with a seven-figure bankroll, but also not a new player unaware of the poor payout structure and negative return on investment likely from these marquee contests. New players will show up for big prizes, and sharks will hang around to take their entry fees, but somewhere in the middle is a group of players who are dissatisfied with the current format.