DraftKings' profit jumps nearly 40% after scandal rocks daily fantasy sports

The top two daily fantasy sports sites, DraftKings and FanDuel, both saw an increase in the number of entries this past week, according to David Purdum and Darren Rovell of ESPN.

According to data provided to ESPN by industry analytics provider SuperLobby.com, the number of entries at DraftKings this week increased from 3.75 million to 4.14 million, a 10.4% increase, while FanDuel’s entries jumped 6.3%, from 3.18 million to 3.38 million.

This comes after the New York Times rocked the industry with a story raising questions of insider trading and who has access to what information and when as well as a report that DraftKings employees were winning millions at their rival site.

What is unclear from the number of entries this week at DraftKings and FanDuel is how much of that represents new players. As professional gambler Bob Voulgaris noted, there is an advantage to players to have numerous entries — the top players may have thousands of entries each week — and it is possible that more players are using this strategy now that is more widely known.

But more importantly to the industry, revenues and profits soared this week.

According to ESPN, DraftKings saw profits (entry fees minus pay outs) jump from $US1.9 million last week to $US2.6 million this week, an increase of 37%. While we don’t know FanDuel’s profit from last week, this week’s profit of $US3.5 million was described as “a similar increase” to the rise at DraftKings.

So, not only are there more entries, and likely more players, the players appear to be spending more on those entries, suggesting players are being more active in the more expensive games.

DraftKings and FanDuel are already facing a class action lawsuit as well as increased scrutiny about the legality of the industry. But for now, the so-called scandal is just making the industry more money.

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