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DraftKings cut guarantee as daily fantasy activity, margins decline

draftkings-cut-guaranteeDaily fantasy sports activity continued to fall in Week 12 of the NFL season, prompting DraftKings to cut $1m off the guarantee of its marquee football contest.

According to numbers crunched by DFS data specialists SuperLobby.com, Week 12 activity at DFS operators DraftKings and FanDuel fell around 7% from the previous week, marking the seventh consecutive week of declining participation. But the operators also saw declines in effective margins, breaking the pattern of recent weeks.

FanDuel reported total entry fees at its guaranteed prize pools (GPP) and cash games falling around 7% from the previous week to $21.8m. Despite the fall – partly a seasonal phenomenon but also attributable to the company’s withdrawal from the New York state market after Attorney General Eric Schneiderman issued a cease & desist order – FanDuel managed to post an effective margin of 10.04%, down around 0.3 points from the previous week.

DraftKings has opted to remain in the New York market while it fights Schneiderman in court, but it too saw GPP fees fall 7% from the previous week. DraftKings’ Week 12 margin was almost identical to FanDuel’s, but its week-on-week decline was steeper, falling 1.6 points from Week 12’s season-high 11.64%.

In response, DraftKings announced it was shaving $1m off the guarantee for tis Millionaire Maker marquee NFL contest. While the overall guarantee will fall to $4m in Week 13 – down from $10m in Week 1 – the top prize will remain $1m. Rival FanDuel has undertaken more drastic cuts to its marquee contest but will maintain its Sunday Million guarantees at $2m total and $200k for top spot for Week 13.

Perennial third-place finished Yahoo broke with the pack by posting flat GPP fees while enjoying its first back-to-back weeks of positive margins. Yahoo’s Week 12 GPP fees fell a mere $102 to $860,955, while margins were in positive territory for only the third time this season at 2.6%, although that represents a comedown from last week’s 9.6%.

Yahoo’s marquee Sunday Baller contest came up $5k short of selling out in Week 12, but the overlay wasn’t sufficient to prompt Yahoo to cut guarantees. The Sunday Baller’s guarantee will remain at $350k for Week 13.

Like DraftKings, Yahoo has opted to remain in the New York market until the legal drama plays itself out. New York Supreme Court Justice Manuel Mendez has promised to issue his ruling “soon” on last week’s hearing and some observers believe a decision could be issued later this week. Whatever the ruling, the losing side will inevitably appeal, meaning the ultimate verdict won’t be known for a good while yet.

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November 30, 2015: posted in News And Reviews No Comments

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