For sports fans who have thus far abstained from participating in daily fantasy, I imagine you feel similar to myself in that the mammoth onslaught of advertising feels similar to high school peer pressure. If you’re hoping that the industry will throttle down its ultra aggressive and ultra targeted user acquisition spree, I have bad news: It’s not going away anytime soon and in fact, it’s only just begun.

I wrote about daily fantasy back in September when a handful of big moves that included acquisitions, partnerships, product launches, and venture fundings, along with the industry’s first large scale advertising blitz, seemed to signal a new chapter for the daily fantasy space. My thought back then was the industry was beginning to snowball and was rolling downhill.  But with major media companies mainly standing on the sidelines and with the possibility of regulation looming, perhaps the growth of daily fantasy would grow in a more organic fashion similar to traditional fantasy sports.

But if you’ve been following along, daily fantasy has actually kicked up a few gears with major announcements coming fast and frequently. Just in the last or so month we’ve seen:

ESPN taking a big stake in DraftKings (deal hasn’t closed yet).

Yahoo announcing they’ll launch a daily fantasy game.

MLB upping their stake in DraftKings (They took a stake in 2013 but it went unreported).

15 NFL teams reaching partnerships with FanDuel.

The parent company of Poker Stars and Full Tilt Poker announcing they’ll enter the market.

You know what’s missing from that list? Not even a chirp on the regulation front. Outside of a HBO Real Sports segment on the industry almost a year ago largely it’s been crickets and with the industry firmly entangled with the likes of Disney, Yahoo, the NBA, MLB, NHL, Comcast, and around half of all teams, the idea daily fantasy would fizzle out is long gone.

How’d we get into this advertising land grab?

If you’re confused as to what exactly is going on, the simplest explanation I can give you is this:

FanDuel has been around since 2007 with DraftKings founded in 2012. Up until 2013, the reported funding for both companies was quite modest. Going off of CrunchBase’s numbers (which many will tell you are not accurate as both companies seem to raise money, spend it, borrow money under venture debt terms until the next big round of capital comes in) DraftKings seed round in 2012 was $1.4 million followed by an A round of $5.6 million in 2012, a $24 million B round in 2013, a $41 million C round in 2014, and now ESPN’s $250 million dollar investment in a TBD D round.

FanDuel has been around longer and is reported to have more users than DraftKings. They’ve raised $86.2 million per CrunchBase, almost all of which came last fall. We’re told to combat DraftKings monster TBD round, FanDuel is planning on raising a similar sized round.

What’s basically happened here is the VC’s warmed up to the idea. Whatever Powerpoints and spreadsheets that were shown to investors worked as the money has flooded in the last two years. With money in the bank to fuel user acquisition and with the knowledge the VC community was embracing the industry and were not leery of regulation, the pro leagues (minus the NFL) jumped on board, many of which missed the boat on the rise of traditional fantasy. Soon after teams did too although there is conflicting information on if they’re getting stakes in these companies as well.

The end result – a partnership and funding arm’s race that is has exploded with the knowledge traditional fantasy operators would likely join the market. Until then the mandate was simple: Don’t worry about profitability, more money will come and is available, spend to acquire as many users as you can, and get them hooked as the long term value is there.

Graphic via Sports Business Journal from less than two weeks ago. This graphic is already stale as FanDuel has added 15 NFL team sponsorships since.

Is This Sustainable?

Are these companies overfunded and destined to implode? FanDuel might have a bit of an easier path to an IPO mainly because they’ve been transparent with their numbers by providing quarterly reports on their growth (audited numbers are part of any IPO process). Raising some eyebrows is the fact that as part of ESPN’s pending investment in DraftKings, DraftKings is on the hook for $500 million in exclusive advertising commitments over the next few years. There are some rumblings that should DraftKings not be able to make those commitments, ESPN’s stake in the company could increase and perhaps set the table for an outright acquisition by ESPN/Disney.

Meanwhile Yahoo’s entry into the market will likely be less costly due to the fact they already have over ten million fantasy users to upsell to daily fantasy but could accelerate ad spending by FanDuel and DraftKings.

While estimates of daily fantasy users are all over the place (keep in mind, active users and paid users are a subset of total users that may be reported) there are varying beliefs on how close DraftKings and FanDuel are to weening themselves off of investor’s money. I asked Adam Krejcik (@akrejcik) from Eilers Research if he thought either company could operate profitably anytime soon. Krejcik said, “FanDuel and DraftKings would both be profitable today if they stopped marketing.” It’s worth noting DraftKings has a half a billion in advertising commitments before they could go that route.

Chris Grove, publisher of, was a bit more skeptical saying, “I feel confident they’re nowhere near it in the status quo.”

What percentage of these large and soon to be larger funding rounds are going directly into advertising programs?

“To say 100% would be an understatement. Jokes aside, the vast majority of money coming in is likely being funneled toward user acquisition and marketing,” says Grove.

It’s Going To Get Worse

With ESPN having skin in the game now, Yahoo and others entering the market, and larger investment rounds either pending or likely coming soon, the onslaught of advertising is going to going to get worse. How much worse?

According the Krejcik, “High likelihood that FD & DK will spend 2-3x more on advertising this NFL season versus last year, so prepare yourself for plenty of more commercials, sponsorships, etc.”

Grove forewarned that it would be “Over-over-overkill.”

Some Personal Thoughts

I decided to research this space a bit more because it is interesting but mainly the non-stop advertising by these companies was becoming increasingly annoying, especially given the ad campaigns can be somewhat obnoxious and are rarely refreshed with new creative.

Personally, I love fantasy sports. I typically have three fantasy football teams and after nearly a decade of not playing fantasy baseball, I’m in my third straight year of playing. That said, I haven’t taken the bait with daily fantasy and don’t think I will.

A part of me is irked that it’s legal. I don’t think it should be illegal, but I can’t wrap my head around why daily fantasy is legal and online poker and sports betting is not. You can’t look me in a straight face and say daily fantasy is a game of skill but poker isn’t.

Daily fantasy seems more a hybrid of a chore and a hobby which is fine but I’d rather lazily bet $25 by looking at some spreads, seeing the Jaguars are favored, know that’s really fucked up and bet against them rather than researching how to build a really great lineup for a given day. I don’t begrudge the fact that a lot of money is being made and lost in this industry, moreso the advertising blitzkrieg the likes of which I can’t ever recall. If any regulation ever does come, I’d hope advertising would be curtailed extensively. I understand it’s an arms race and everyone is just trying to get their piece, but trust me, I’m well aware of your existence and the repetitive desperate pleas for me to join isn’t helping the cause.

Seriously.....fuck this guy.
Seriously….. this guy.

It’s not just the lack of time or interest (I’m sure a younger version of myself would eat this up), it’s the fact there really isn’t much of a social component to daily fantasy. You know those fantasy leagues I mentioned earlier that I participate in? Three out of those four leagues have live drafts that I look forward to, have trophies for first place and punishment trophies for last place, and they’re a way for me to stay in touch with many people I potentially would fall out of touch with.

People bring cash and checks to the drafts (in addition to liquor, beer, and another item that is quasi legal/illegal depending where you live). Picks are heckled, smoke and piss breaks are argued about but taken, and for months it’s a source of engagement not only with members of your league, but the sport you follow as your rooting interest for certain players usually spans an entire year.

Daily fantasy offers some fraction of that, but really it’s mostly a pair of cobbled together consortiums inundating the market with really shitty commercials (FanDuel isn’t as bad but jesus DraftKings, get a new ad agency).

I asked Grove if we were in a bubble and if this would maybe end soon:

Some parts of it are probably bubble-esque. But I think it’s undeniable that this product drives additional engagement with sports and sports media. And that’s going to be attractive to the leagues even at a loss (even at a big loss).

So while some parts of the story as-is might not be sustainable, the product itself is just about guaranteed to stick for the long term.

That’s okay. The product is fine. I just hope and the advertising/sponsorship aspect of the business is a bubble and that it pops at some point. It’s unclear if that will happen at all but if it does, what I’ve learned is that it’s years away. Unfortunately for those of you who are as easily pained as I am by the inescapable and relentless targeting the industry has shown, it’s going to get much much worse before it gets any better and waiving the white flag and joining won’t make it stop either. It’s crazy to think we’ve reached a point where many of us would gladly take a heavy dose of I’m Loving It, Just Do It, I Want To Be Like Mike, and Up For Whatever if it meant less Play For Free, Matching Bonus, and Win Real Money but sadly I’m now nostalgic for any ad that doesn’t have to do with daily fantasy.

About Ben Koo

Owner and editor of @AwfulAnnouncing. Recovering Silicon Valley startup guy. Fan of Buckeyes, A's, dogs, naps, tacos. and the old AOL dialup sounds

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