Post-Super Bowl Success, DFS Sites Get Creative With Contests

As customary, Sunday, Feb. 4– the date of Super Bowl LII — was sports betting’s unofficial national holiday. Nevada sportsbooks reportedly generated $159 million in handle. Meanwhile, total bets placed through “alternative” avenues constituted another estimated $4.6 billion.

Those astronomical numbers once again corroborate what’s common knowledge these days. Namely, that Americans love to watch the year’s biggest game with a little (or a lot) riding on the outcome. Yet, for its near-five-year history as an increasingly mainstream subset of the fantasy sports genre, daily fantasy sports (DFS) was without an invite to the annual party.

DFS previously avoided single-game contests

That’s particularly ironic, as football continues to be DFS’ biggest cash cow on an annual basis. Moreover, the sport is clearly a driving force in new customer acquisition for the industry’s operators. This even as the likes of MLB, NBA and PGA make notable strides.

For the majority of its life cycle, DFS appeared to take its guidance from the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) when it came to the issue of real-money contests for one-game slates.

Key wording in UIGEA specifies that the results of real-money fantasy contests should be based primarily on the skill
s of the participants. Additionally, it is “determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.”

The language seemed unambiguous enough, leading the sites to steer clear of offering contests based on popular but one-off events such as the Super Bowl, All-Star games and others.

This didn’t mean that DFS operators went dark with respect to real-money contests on past Super Sundays, however. For example, prior to the 2017 postseason both DraftKings and FanDuel offered two-week, two-game slates encompassing players from both the Super Bowl and those of previous week’s Pro Bowl. Any contests consisting exclusively of the players from the two Super Bowl teams were strictly freerolls, exempting them from running afoul of the UIGEA language.

This year DFS started taking more legal chances

That all changed significantly beginning in January. Buoyed by the increasingly growing number of new state regulations governing DFS, the industry’s two heavyweights rolled out a robust selection of Guaranteed Prize Pools (GPPs) and cash games exclusively based on the Eagles-Patriots matchup.

DraftKings was actually the first to break single-game-slate ground. They’d done so the week prior for the Pro Bowl with a new roster format, Showdown, that had debuted during Wild Card weekend. The new game represented a major DFS operator’s first attempt at incorporating individual defensive players into fantasy rosters.

Both companies then jumped into Super Sunday without reservation. The Big Game Bowl headlined FanDuel’s offerings. The contest carried a $9 entry fee and paid $1 million as a top prize. DraftKings countered with its Big Game Millionaire, which sported a $20 point of entry and also awarded $1 million of its $2.5 million prize pool to first place.

There was essentially something for any bankroll on either site. Each also offered a multitude of other GPPs at a wide range of price points. However, the one overriding theme among both operators was that neither opted to offer single-game contests in their respective traditional full-roster format. FanDuel’s contests were exclusively in their new SuperFlex mode. Meanwhile, DraftKings offered theirs in its aforementioned Showdown format.

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Single-game gamble paid off in attendance

Both companies have labeled their first foray into single-game slates a success.

“We saw over 2x growth in active users for the weekend”, reports Emily Bass, FanDuel’s Senior Communications Manager. Meanwhile, a DraftKings spokesperson reported that the company had over $1.4 million in entries for its Super Bowl contests.

The overall popularity of the games seemed to help cement the viability of single-game slates for FanDuel — they subsequently began rolling them out for NBA on a nightly basis. Like the Super Bowl contests, these are not currently being offered in the site’s traditional “full roster” format; rather, they consist of five-man mini-rosters that have one “MVP” slot which contains a 1.5 multiplier on fantasy points earned.

Additionally, both sites are tackling NBA All-Star weekend as they did the Super Bowl. FanDuel currently has a comprehensive selection of GPPs and cash games in its mini-roster format for both Friday night’s Rising Stars Challenge and Sunday’s NBA All-Star game. DraftKings has its own full array of Showdown-formatted contests for both games in its lobby as well.

Legality of single-game slates seemingly not a concern

Unsurprisingly, both companies express confidence in their respective assessments of the legality of single-game slates.

Bass offered the following statement regarding FanDuel’s position:

“FanDuel adheres to all local and federal guidelines regarding fantasy sports and has implemented important consumer protections for its users. Single game contests require that a user must select players from both teams, which is compliant with all state regulations.”

That does appear to leave one fairly significant unanswered question – given the UIGEA’s language, are the sites actually in compliance in states where no express DFS legislation has been passed, but where the companies are still operating?

Federal law would seem to be the default in such scenarios. However, to date, no challenges have come to the surface regarding the issue. Moreover, both companies presumably performed sufficient legal due diligence so as to proceed with confidence that there wouldn’t be any stumbling blocks.

Do these single-slate games keep enough of the skill element?

The question of whether the skill component that serves as the buffer between DFS and a “gambling” designation is removed with single-game slates is another topic for debate.

Tellingly, the sites have thus far opted to roll out single-game contests with rosters that offer much more positional flexibility. Moreover, in the case of FanDuel, the site uses fantasy-point multipliers for one roster spot. These tweaks do add strategic elements not found in their traditional contests – such as deciding whether to roster both quarterbacks in a game (a move that paid off handsomely in the Super Bowl) — arguably keeping the skill factor firmly in play.

A valuable supplemental revenue source for DFS operators?

That single-game slates remain viable – and free of legal entanglements – could ultimately be a critical factor for the sites. The ability to continue offering them would give the companies a significant boost in contest inventory, especially during the extensive MLB, NBA and NHL seasons.

How much additional revenue that could lead to is impossible to prognosticate. However, if early returns are any indication, it’s certainly plausible that single-game contests could represent a consistent profit stream at a minimum.

Additionally, with rumblings about the struggles that DFS operators as a whole may increasingly encounter in continuing to attracting new users year over year — and with the annual growth of overall entry fees beginning to slow as well – single-game slates may prove to be a shot in the arm that can offset some of those obstacles.