Roundtable: Will DFS consumer spend double by 2021?

Roundtable: Will DFS consumer spend double by 2021?

Friday, December 2, 2016 Posted by Sam Cooke

Following big and positive claims by Juniper Research which forecast the growth of the DFS industry over the next few years we spoke to industry figures including Oulala CEO Valery Bollier, Mondogoal CEO Shergul Arshad and Sportito founder Riccardo Mittiga to gauge their reactions.

In its latest report Juniper stated that DFS consumer spend will hit $5.3bn by 2021. We also quizzed them on their thoughts on the recent Draftkings Fanduel mega merger.

Totally Gaming: Do you anticipate DFS consumer spend doubling within the next five to six years, or is Juniper being a little optimistic?

Bollier: Juniper study is simply confirming what we, at Oulala, already know. After a long period in a very early phase in the European market, DFS is now growing quickly and should reach the early majority in the next few months.

This evolution of the market’s maturity will have a radical influence on the monthly spendings per customer, since more leagues will be entered and created by DFS players, as their entourages are now joining the wave. Whilst these numbers cannot obviously be officially confirmed, the most important information to retain here is the direction taken by our sector: more people will play DFS and their average spendings will also increase. As you can imagine, this will have a very positive influence on the profitability of DFS operators.

Arshad: The per capita spend is optimistic, but the aggregate is far under. The reason is globalization as DFS permeates more and more into sports betting sites. I also see the rise of new formats as a way that aggregate spend will rise.

Mittiga: With a five year timeframe you can essentially predict whatever you want, I never take such longshots seriously because I am more focused on assessing the right steps to make to increase one client’s revenue by €1 tomorrow.

TG: How important are private leagues to this anticipated growth and in avoiding the ‘sharks’ taking the lion’s share of prize pots?

Bollier: Private leagues are obviously an efficient way to prevent the sharks from eating all the fish. However, other measures could also be adopted to further protect the integrity of the ecosystem. For example the league’s entry fees could be capped at a low amount. If the average entry fees remain at lower levels, sharks will not be tempted to invest their time in a lower profit activity

Another point is that guaranteed prizes are a great marketing tool but their amounts per league should be capped at a “reasonable” level. As we have witnessed in the USA, offering extremely high guaranteed prize pools will strongly increase the incentives for sharks to invade the ecosystem, and therefore frustrate casual players

DFS licenses will start to appear in Europe early next year (with Malta leading the way), and we certainly hope these future regimes will take into account the above measures. This will help our sector to have a healthier growth, rather than having a Gauss curve trajectory, similar to the poker industry.

Arshad: I think it varies. For many, the "lottery ticket" of winning a low entry, big stakes tournament is fun and the big draw, and that is something that won't be solved or helped by private leagues.

At the same time private leagues will be a great social feature to encourage friends to play and introduce new people to DFS.

Mittiga: In Europe private leagues are the most common way to play traditional fantasy sports. Every operator that wants to attract customers should include this feature in their product offer.

It has two main benefits, one it significantly reduces the risk for novice players to be overwhelmed by pro players, and secondly it increases the social appeal of the game.    

TG: What does the intended mega merger between Draftkings and Fanduel mean for the others in the space?

Bollier: The merger is a very interesting news for the European market, since Draftkings and Fanduel will combine their forces to raise the awareness of our young sector.

The presence of Draftkings in Europe had already been extremely positive for our market, as they have proved that they were highly concerned by the well being of the sector in the long term, and not just focused on grabbing short term profits.

There is therefore no doubt that this merger will help us in our effort to structure a solid and balanced ecosystem, as our industry need them to lead the way.

Arshad: In the US, it's game over. No new entrants will get funded and no survivors will have much scale. I fear consumer impact if "rake" is raised. But that said overall, it's good to have a big, massive, endorsed entity as it adds credibility to all operators in the space.

Mittiga: This is a major opportunity for the industry, this merger, should it be approved by anti-trust, demonstrates that the market is much bigger than the current figures, and that DraftKings and FanDuel own a relevant share in only one region (the US).  At the moment the real losers are the companies that invested in DK and FD in the hope that one would emerge dominant, now the merger will see those investor holding a smaller share of a still “listing” company.

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