With all that cash floating around daily fantasy sports sites are getting their names out in front of the public, but they’re also running a serious risk of overexposure.
Oh, and there’s also uncomfortable question about when these sites will start producing revenue and how long their free ride from lawmakers will last?
Both DraftKings and Fan Duel are awash with investor cash and are desperate to harvest new players for their sites. The entry fees these players pay help fund tournament prizes will leaving about 10% for profit.
That’s a great business model so long as you have players actually funding the tournament prizes.
Consequently, both companies are willing to invest a fortune in player acquisition costs. That’s why sponsorship deals like the ones they’ve inked with the NFL and ESPN are so important, and so large.
According to a recent report in the Washington Post, DraftKings is now the biggest spender on NFL advertising, surpassing longtime leaders like Budweiser.
While the DFS industry is making its big push to to the American public, it’s also combating a growing number of critics who don’t think DFS is more like traditional sports betting than its proponents would care to admit.
One particularly vocal critic is Congressman Frank Pallone Jr. (D-NJ).
Pallone, who has been fighting hard to legalize sports betting in his home state, says daily fantasy sports are treading murky legal waters saying:
Despite how mainstream these sites have become, though, the legal landscape governing these activities remains murky and should be reviewed.
He’s hardly alone. Lawmakers in several states, including California, are reviewing the legal status of DFS sites.
In short, daily fantasy sports is burning hot today, but there’s no telling when the industry will come flaming back to earth.
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