DFS Market Grew Just 4% in 2016January 11, 2017 12:34 pm
In 2015, FanDuel and DraftKings spent more money advertising than America’s entire beer industry, but after hitting a peak last summer, the daily fantasy sports market has now bottomed out with both firms’ valuations having been more than halved. Consequently FanDuel and DraftKings, once fierce rivals, are now in serious discussions to merge their operations.
By any measures their fall has been spectacular, with the situation mostly caused by a greater level of scrutiny from industry watchdogs, which has led to millions of dollars being spent by these companies recruiting lawyers and lobbyist to promote their cause. As a result, the 222% year-on-year growth that was reported for 2015 has now given way to a mere growth rate of 4% in 2016, according to a recent report released by Eilers & Krejcik Gaming. Commenting on his report, however, Adam Krejcik expressed surprise that the growth rate hadn’t reached negative territory, and elaborating further stated:
“[4%] is not bad, in light of the regulatory headwinds and the reduction in sales and marketing.. So I think that speaks to the public perception; there have been quite a few articles about the death or demise of DFS, and I don’t think that’s the case. But you could certainly say the growth has slowed dramatically.”
Casting a further positive spin on the latest figures, Krejcik also said that the $3.26 billion that players spent on DFS contest buy-ins for 2016 was comparable to that of the previous year, describing it as “a nice, sustainable floor for the business.” Going forward, Krejcik is currently predicting an annual growth of between 5% and 15% all the way through to 2020. In the meantime, the Eilers report has suggested that the industry is unlikely to see any more bullish forecasts until it is better able to diverse its core audience, which continues to be predominantly white males aged 25-35.