The daily fantasy sports industry’s month of bad publicity finally has caught up with FanDuel and DraftKings. The major operators each experienced a drop in entrants and revenue from their lucrative NFL contests on Sunday, Oct. 18, exactly one week after both companies posted record numbers despite an unprecedented insider information leak scandal.
DraftKings drew 3.76 million entries to its NFL Week 6 contests with guaranteed prize pools on Sunday, Oct. 18, taking in nearly $23 million in entry fees and paying out about $21 million in prize money, according to a report by SuperLobby, which analyzes the daily fantasy sports industry. By comparison, on Sunday, Oct. 11, DraftKings drew 4.14 million entries to the same contests, drawing about $25 million in entry fees and paying some $22.5 million in prize money.
FanDuel experienced a similar drop in traffic. The company drew 3.27 million entries on Sunday, Oct. 18, with nearly $20 million in entry fees and about $17 million in prize money going out. All three totals are down from Sunday, Oct. 11, when FanDuel recorded 3.38 million NFL entries, $20.58 million in entry fees and $17.13 million in prize money payouts.
The figures were the worst either company has experienced in October. However, they were similar to figures FanDuel and DraftKings posted on Sunday, Oct. 4, which at the time was the most successful month in either company’s history. Both FanDuel and DraftKings are valued at more than $1 billion each, and each daily fantasy sports operator says it will have doled out more than $1 billion in prize money by the end of 2015, the Wall Street Journal reported.
DraftKings and FanDuel’s record statistics on Sunday, Oct. 11, came just days after public concern about the daily fantasy sports industry reached new heights. Ethan Haskell, a midlevel DraftKings employee, accidentally leaked confidential user information about NFL contests the same week he won $350,000 playing in a FanDuel contest. The incident kicked off unprecedented public scrutiny, including calls for oversight at the federal and state levels and efforts by both companies to reform their internal standards for data security and employee behavior.
Daily fantasy sports operators argue their contests are games of skill, not games of chance, and that they are legal under a 2006 federal statute that excludes fantasy sports from bans on online gambling. Nevada dealt a sore blow to the daily fantasy sports industry last Thursday, when regulators formally identified the pastime as a form of gambling and banned all daily sports operators from the state until they are properly licensed. Any attempt to apply for a license would harm the daily fantasy sport's legal position, as experts say it would be a tacit admission that the activity is a type of gambling.