- World’s biggest daily fantasy sports player now in Australia.
- Claims that ‘skill’, not ‘luck’ means it’s not gambling.
- Will compete with local startups DraftStars and Moneyball.
Controversial daily fantasy sports company DraftKings is off and running in Australia after it was granted a government license by the Northern Territory Racing Commission.
Together with US rival FanDuel, the pair virtually own the global fantasy sports market. In 2017 alone, DraftKings members took home more than $1 billion in prizes.
How much they paid for it is just one of the controversies daily fantasy sports (DFS) companies have stared down as their popularity exploded over the past couple of years.
One report suggests there are as many as 1.65 million traditional fantasy sports players in Australia, which is now the first country outside of North America and Europe – and eighth country overall – where DraftKings operates.
The company will begin offering DFS contests to Australian consumers in Q2. It does not intend to offer its products and services to residents of South Australia.
“Australia is an important market for DraftKings, as it combines devoted sports fans with sophisticated, tech-savvy consumers – exactly the kind of people who love competing on DraftKings,” DraftKings CEO Jason Robins said.
“Within the last few years, Australia’s burgeoning fantasy sports market has dramatically evolved, adding a variety of daily fantasy sports platforms, feeding the appetite of the many passionate sports fans who love getting closer to the teams, athletes and sports they love.”
DraftKings sells that experience of “getting closer to the game” with a variety of statistics, noting that:
- Almost half its customers have started following another sport since engaging on DraftKings.
- Two-thirds say that they engage with DFS because it makes watching sports more enjoyable.
- 60% report watching games involving teams they don’t usually follow because they are following their fantasy players.
- 60% watch more live sports and read more articles about sports since they started participating in DraftKings contests.
- 41% report watching more sports specific TV programs.
But it also notes that “in the US alone, DraftKings has worked with lawmakers and regulators in nineteen states to enact smart regulations and create a transparent environment for its players”.
You might interpret “worked with” as “fought”.
First of all, there’s a cloud over whether DFS fans are actually gambling. Here’s a basic rundown on how it works in a football league:
- You pay a buy-in amount to enter a tournament
- You have a fake “budget” to pick players for the week
- You’ll probable be playing against hundreds of thousands of other members. You score points based on how well your players do.
- And you get paid according to how well you do.
If that sounds familiar, then you’ve probably already had experience with any number of the AFL or NRL fantasy leagues run in Australia.
The AFL’s official competition gives away cash prizes at the end of the season, but weekly prizes are limited to vouchers and footballs.
Oddly, the AFL openly supports a weekly cash pool version, DraftStars, on its website, telling fans “Why you should play both”.
DraftStars was owned by CrownBet until it was bought recently by PlayUp, a fantasy sports gambling company previously backed by the family of Prime Minister Malcolm Turnbull.
Last year, it offered a share in $100,000 for anyone who could pick a team that scored more than former Swans champion Barry Hall’s fantasy team in the AFL Grand Final.
As “not-gambling” sites, DFS companies don’t seem to struggle to find positive press.
Another Australian DFS site, Moneyball, offers weekly buy-in of between $2 and $500. The Fairfax Media connections “run deep” at Moneyball.
Back in the US, DFS companies spent a long time arguing with various state lawmakers about whether their games constitute gambling. Keeping in mind, the phenomenon launched in 2012 as a response to a ban on internet gambling.
They’ve had some notable wins, including a landmark victory in New York in 2016 where they convinced Governor Andrew Cuomo that DFS is actually a game of skill, not luck.
Soon after, both DraftKings and FanDuel were back in New York to settle an $US8-$US10 million false advertising case. In a nutshell, it was found that “everyday fans” didn’t actually win a whole lot — the attorney-general’s office found that 94% of users lost money as a result of the “sharks and minnows” problem.
The vast majority of players are “minnows”. And in the past, as in a case reported by the New York Times, the “sharks” are DraftKings and FanDuel employees, who may or may not have used access to inside data to win up to $US6 million. (Here’s what DraftKings had to say about that report.)
Regardless, DFS is now a mostly legal juggernaut, projected to be bringing in more than $US14 billion by 2020. That’s just eight years after DraftKings was founded.
And now, the likes of “not-gambling” DFS sites such as DraftStars and Moneyball in Australia are facing their biggest challenge.
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