Despite legal challenges in several states, daily fantasy sites Draft Kings and FanDuel amassed nearly a combined $3 billion in entry fees last year. And that’s more than three times what it took in the year before. But at the same time, both companies still didn’t make a profit in 2015.
This showed that with a heavy advertising blitz during NFL and college football season, daily fantasy grew in 2015. According to industry estimates, FanDuel collected $1.8 billion in entry fees making it the largest DFS company. Draft Kings collected $1.2 billion last year. The two companies account for nearly all of the DFS market.
The Boston Globe reports that the two companies experienced huge growth in 2015:
“After just three years in business we had a very successful 2015, and expect continued progress in the coming year,’’ said DraftKings spokeswoman Sabrina Macias.
FanDuel said it “has consistently posted triple-digit growth” since its founding and that 2015 was its “best year yet, reaching more than 6 million registered users.”
About 10% of the entry fees is kept while the rest of the money is used to bankroll the prizes for the players. The Globe reports while DraftKings and FanDuel are private companies, industry estimates show what they made in entry fee and revenue in 2015:
Eilers & Krejcik estimated that FanDuel reaped about $174 million in revenue last year, compared with about $106 million for DraftKings. While the two companies are private, they have reported entry fee and revenue figures in previous years, giving an idea of the industry’s growth.
The DFS industry depends on investors to grow and both companies needed that cash to keep afloat. Due to the stream from outside sources, the estimates show that they both lost money:
Eilers & Krejcik estimated that DraftKings lost about $280 million in 2015, while FanDuel lost an estimated $137 million.
So while DraftKings’ and FanDuel’s awareness grew in 2015, they both have several hurdles to overcome in 2016 and their survival depends on whether they can win the legal challenges and find a way to keep afloat without having to heavily depend on investors.