Opinion: Allowing Multiple-Entries At DFS Sites Creates Issues
Daily Fantasy Sports (DFS) has grown by leaps and bounds over the past three years, from a 1.28 million industry in 2011 to a projected $91.3 million industry in 2014 according to Eilers Research. A key element of that growth has been the industry’s adoption of, and marketing focus of big-money, guaranteed contests.
In order to meet these guarantees the industry has also made the calculated decision to allow multiple entries into its events.
The embracing of multiple entries (allowing players to enter many times into the same contest) is certainly an asset when it comes to creating eye-catching payouts, but many people feel this asset is a double-edged sword that will eventually ravage the DFS economy, and lead to the industry’s downfall.
Opinions vary over whether the big guarantees, and by necessity multiple entries, are the proverbial Catch-22 for DFS? And if the instrument needed for growth will also cause the industry’s demise? You know, like Iron Man’s arc reactor.
The big Guaranteed money contests
The “lure” at DraftKings DFS, is their $2.2 million guaranteed ($1 million for first place) Millionaire Maker contest. The business model is simple: Attract new players with the possibility of winning a life changing amount of money for a relatively small investment.
There is a major problem with this business model however.
The DFS industry simply doesn’t possess a large enough player pool to meet these multi-million dollar guarantees, which necessitated a creative solution to the problem. What they settled on was straight out of the tournament poker playbook: Allow players to enter each contest multiple times.
Multiple entries increase the total number entries without a need to grow the number of unique entrants – an ideal scenario for DFS and its small player pool.
Theoretically, you’ll still get the new players looking to strike it rich, and you’ll also get serious players (players who feel they have an edge over the field) to enter many times to improve their odds of winning and reduce variance. It seems like a win-win.
That being said, allowing singular players to enter a large DFS contest multiple times creates certain drawbacks. Drawbacks that have many longtime online poker industry types wondering if DFS is sacrificing its long-term potential for short-term growth.
Maintaining a thriving ecology isn’t easy
What these tweets allude to is allowing multiple entries would seem to widen the already pronounced skill gap inherent in DFS contests – top DFS players use many methods, including computer algorithms to select their lineups, while recreational players are using more traditional, less scientific, selection methods.
DFS is certainly a skill-based game, nobody will argue that point, and like all skill-based games there is a need to make sure the game still appeals to recreational players.
Critics argue multiple entries may be providing “expert” players with too big of an edge, which is the death knell for any skill-based contest. If the recreational players never taste success they will:
- Go broke quicker;
- Which increases turnover rates;
- Requiring you to bring in more and more new players;
- And at the same time makes current players less likely to continue playing.
If the skill gap is too high it becomes impossible to replace the disenchanted outgoing players fast enough. When this occurs the winning players see their margins shrink, with the weaker winning player becoming the prey in what becomes a vicious cycle.
The skill gap conundrum is why you don’t see random people challenging chess champions to games, and why some people are seeing parallels to multiple entries in DFS contests to the current situation in online poker where the games have become tougher to beat and a lack of fresh blood.
As Jon Friedberg pointed out, this model may be unsustainable for DFS. Friedberg went on to explain that because of DFS’s novelty you currently have an influx of novice players who are facing off against a contingent of already expert players and thus have a very small chance of survival made worse by multi-entries, and once the novelty is gone they will not be replaced as easily:
Others see multi-entries as a necessary evil of sorts:
And still others like DFS wizard Jon Aguiar don’t see much of a downside, and feel multi-entries are the key to growth for the burgeoning DFS market.
Perception vs. Reality
Even if one assumes Augiar is correct there is another aspect of this debate to consider, the perception of multi-entries. Whether they provide expert players with a greater edge or not, potential players may see them as tipping the scales too far in the favor of the expert player, as many feel reentries in poker do, even though many professional players disagree with that assessment.
Yet another debate where opinions vary.
Will multi-entries still be needed down the road?
With DFS now partnering with sports leagues and some of the biggest athletes in the world perhaps they will back off the big guarantee tournaments and either eliminate or reduce the number of entries players are allowed.
Perhaps there is a middle ground, as Mike O’Malley opined:
Or a dramatic shift in marketing strategies on the horizon for DFS:
Steve Ruddock is the content director for BettingUSA and the Editor-in-Chief of Gaming Law Review.
Steve has covered the legal and legislative developments in the US gambling sector for more than a decade for online and print publications.
