OT - ESPN OTL Article on FanDuel / DraftKings

[J187Money]

Good read...and accurate based on what I know about the players involved.

The inside story of the quick rise and quicker fall of DraftKings and FanDuel

 

[whaler11]

Fairly amazing this scam is legal most places but actual sports gambling isn't.

 

[J187Money]

Fairly amazing this scam is legal most places but actual sports gambling isn't.

Everything was based on the "skill" of the player and the fact it isn't tied to the outcome of any particular game (score wise). Just blowing through a loophole that everyone uses for season long FFL.

Had to be early 2013 when I talked to Nigel about working at FD, but I could never get comfortable with two things:

- the legal aspect without a hard ruling on it, because anything that becomes that big is going to have people coming for it.
- that IF FD could really make enough money to make this a real thing, someone else would replicate it, and the only thing that would be standing in the way is marketing $ - there was no true barrier to entry if you had enough money

 

[UCFBfan]

And now they are going to be one massive company....fun times....

 

[whaler11]

Everything was based on the "skill" of the player and the fact it isn't tied to the outcome of any particular game (score wise). Just blowing through a loophole that everyone uses for season long FFL.

Had to be early 2013 when I talked to Nigel about working at FD, but I could never get comfortable with two things:

- the legal aspect without a hard ruling on it, because anything that becomes that big is going to have people coming for it.
- that IF FD could really make enough money to make this a real thing, someone else would replicate it, and the only thing that would be standing in the way is marketing $ - there was no true barrier to entry if you had enough money

Sports gambling is as much a game a skill as DFS is.

The rake in DFS is crazy - it was always going to end up where it did. A handful of analytics guys destroying sheep... when 98% of your players lose long term it's not going to be easy to keep replacing them.

 

[UCFBfan]

Sports gambling is as much a game a skill as DFS is.

The rake in DFS is crazy - it was always going to end up where it did. A handful of analytics guys destroying sheep... when 98% of your players lose long term it's not going to be easy to keep replacing them.

I agree with this. The crazy thing is when people start playing DFS with the hope that investing a few hundred could net you big gains. This isn't small time gambling. You are going up against people who make hundreds of different probability lineups and enter as many as they can. The big winners dump thousands of bucks into this. They also do tons of analytical research. Just reading a few sites won't stand you a chance in most cases.

I think the biggest thing that was telling about the fall of DFS was how they did a complete 180 on the advertising. Last year you couldn't go one commercial break without seeing an ad for Fan Duel or DraftKings. Now, you barely hear a whimper outside of some internet ads.

I'll be intrigued to see what name they decide to go with when the merger is all said and done.

 

[J187Money]

Sports gambling is as much a game a skill as DFS is.

The rake in DFS is crazy - it was always going to end up where it did. A handful of analytics guys destroying sheep... when 98% of your players lose long term it's not going to be easy to keep replacing them.

Not arguing against you there, but the argument is that DFS isn't "gambling" - and sports gambling is gambling. If DFS is gambling, than season long FFL is gambling, and then everything is illegal.

The rake is crazy - but in the article they said that at the peak, both companies in total only grossed like $280M of revenue in a year, and they spent FAR more on advertising than that. As a business, it is unsustainable.

 

[whaler11]

Not arguing against you there, but the argument is that DFS isn't "gambling" - and sports gambling is gambling. If DFS is gambling, than season long FFL is gambling, and then everything is illegal.

The rake is crazy - but in the article they said that at the peak, both companies in total only grossed like $280M of revenue in a year, and they spent FAR more on advertising than that. As a business, it is unsustainable.

Oh I know the legal technicalities they are just ridiculous. DFS not being 'gambling' is a ridiculous distinction.

 

[J187Money]

I think the biggest thing that was telling about the fall of DFS was how they did a complete 180 on the advertising. Last year you couldn't go one commercial break without seeing an ad for Fan Duel or DraftKings. Now, you barely hear a whimper outside of some internet ads.

As to the advertising, they have basically cancelled everything other than direct response ads where they can track individual ad ROIs. Similar to the way that dating sites operate - very few use traditional media because they can't track clicks.

 

[UCFBfan]

As to the advertising, they have basically cancelled everything other than direct response ads where they can track individual ad ROIs. Similar to the way that dating sites operate - very few use traditional media because they can't track clicks.

Yeah I had read that in the article when it was released a few months back. I'm with you on the shock on how much they actually spent on advertising versus what they actually made. It is simply incredible how the whole thing rose so fast and came crashing back down to reality......for awhile everyone thought DFS was going to replace season long fantasy. Now, I can't see that ever happening.

 

[J187Money]

Yeah I had read that in the article when it was released a few months back. I'm with you on the shock on how much they actually spent on advertising versus what they actually made. It is simply incredible how the whole thing rose so fast and came crashing back down to reality.for awhile everyone thought DFS was going to replace season long fantasy. Now, I can't see that ever happening.

DFS is for gamblers, season long fantasy is for groups of friends. They serve two different purposes.

There is room for both, but with the amount of money invested, people want outsize returns that only can come with growth that is not rational or sustainable.

 

[UCFBfan]

DFS is for gamblers, season long fantasy is for groups of friends. They serve two different purposes.

There is room for both, but with the amount of money invested, people want outsize returns that only can come with growth that is not rational or sustainable.

I agree with the difference yet you start to see them trying to tap into the season long fantasy group. Just this year Draft Kings introduced the idea of creating a "league" through DFS. I never looked into it but saw it in one of their emails they send around. You can also add "friends" and challenge them, etc. It seemed very clear that they were targeting the crowd who plays season long.

It's been awhile since I read that article you posted but I believe I recall them even mentioning how they were aiming to tap into that large group of people and bring them over to DFS.

In the end, the whole thing is shady. I'll drop a few bucks each season and play dollar to three dollar contests but I'm not looking or expecting to win large sums of money. Unfortunately, many of the people who do DFS and are not skilled gamblers, do not have that same mindset and get hosed.

 

[J187Money]

I played a bunch when I was talking to FD just to get a handle on it. Was able to win about $250 in a couple of weeks in 50/50 contests, but had to spend too much time looking at NBA rosters etc. Too much work for the return, and of course you win enough they will 1099 you and you have to pay taxes, so that's no fun lol.

 

[J187Money]

I would argue that none of this is shady. But anytime there is an opportunity to make money, people will try and make a full time endeavor out of it. No different when online poker was allowed in the states. The casual user will always lose. No different than in the casinos. Anyone thinks differently, that's on them. But that is the main issue the states took with the advertising. Made it seem too easy for the average joe to win.

 

[whaler11]

How they don't allow states to set up a gambling exchange similar to many in the UK is insane.

The lottery is legal - real game of skill there... but Connecticut running an exchange is illegal.

Completely risk free for the state and would generate huge tax dollars. State's rights and all....

Since every US point shaving scandal has been figured out because of the abnormalities in legal betting lines there is no argument against. It would make the results more legitmate rather than less legitimate.

 

[whaler11]

I would argue that none of this is shady. But anytime there is an opportunity to make money, people will try and make a full time endeavor out of it. No different when online poker was allowed in the states. The casual user will always lose. No different than in the casinos. Anyone thinks differently, that's on them. But that is the main issue the states took with the advertising. Made it seem too easy for the average joe to win.

The employees having access to information to use at the other site was pretty shady.

 

[J187Money]

The employees having access to information to use at the other site was pretty shady.

That's fair - they should have been banned from playing at all. But I know a bunch of guys that work at FD and they maintain that the issue was overblown.

 

[whaler11]

That's fair - they should have been banned from playing at all. But I know a bunch of guys that work at FD and they maintain that the issue was overblown.

Sure if what we know is true it's marginally useful. Feeding it to an analytics guy who is playing a thousand games a day it's pretty valuable.

Either way the optics are terrible especially as people start to realize they are the dupes.

 

[Walker11]

This article gave me nostalgia from the old online poker days. I always avoided DFS because I am petty and the way they marketed themselves as specifically not being gambling sites rubbed me the wrong way. @whaler11 if anyone knows, I imagine its you - is there any legal way to play online poker nowadays?

 

[whaler11]

This article gave me nostalgia from the old online poker days. I always avoided DFS because I am petty and the way they marketed themselves as specifically not being gambling sites rubbed me the wrong way. @whaler11 if anyone knows, I imagine its you - is there any legal way to play online poker nowadays?

In Connecticut no.

 

[Husky25]

How they don't allow states to set up a gambling exchange similar to many in the UK is insane.

The lottery is legal - real game of skill there... but Connecticut running an exchange is illegal.

Completely risk free for the state and would generate huge tax dollars. State's rights and all....

Since every US point shaving scandal has been figured out because of the abnormalities in legal betting lines there is no argument against. It would make the results more legitmate rather than less legitimate.

Who do you think "They" are?

"They" is the individual state governments. Connecticut is the only thing stopping Connecticut from running a gambling exchange.

 

[whaler11]

Who do you think "They" are?

'They' is the individual state governments. Connecticut is the only thing stopping Connecticut from running a gambling exchange.

'They' is the federal law that prohibits it.

New Jersey has been in court with the feds for years trying to legalize.

The only places it's legal is because they were grandfathered in (Nevada, Delaware, etc).

 

[Rondogg]

I deposited money and played 50/50 games. I would set my lineup Sunday mornings based on which players I liked and which ones I thought would play well that day. Watching the real time scoring was a blast.

It soon became apparent I was battling against professional gamblers who were playing thousands of matches based on an incredible amount of data and projections. They were well prepared for fish like me who only wanted to have fun, hoping to win on a level playing field.

No, I'll stick to my 5dimes account where I only have to battle the point spread and vig.

 

[Husky25]

'They' is the federal law that prohibits it.

New Jersey has been in court with the feds for years trying to legalize.

The only places it's legal is because they were grandfathered in (Nevada, Delaware, etc).

My bad. I didn't Google it.

 

[whaler11]

My bad. I didn't Google it.

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