Now that DraftKings and FanDuel have those pesky legal issues out of the way, the companies can get back to business. That business is apparently continuing to grow its user base by offering a leagues option. DraftKings and Fan Duel’s specialty has always been daily fantasy, but now users can set up recurring leagues with their friends to play them in daily fantasy contests. This could increase the number of players, and the hope would be to transition them to daily fantasy regulars.
This is not really a shot at ESPN and Yahoo! — the leaders in season-long fantasy contests — because the contests are still essentially daily. This means the competition still only goes for one NFL Sunday — or day of games in MLB, NHL and NBA — but now the league can be restricted to friends and family. Basically the DFS companies are taking the chance that players could go up against an expert out of the equation. People can set up league matches, invite their friends to play, and know exactly who is in their pool. Recurring matches can also be set up, so the same group of people can go up against each other every week.
The launch around football season is perfect. People are getting excited for the NFL, and they may try out DFS if they know they are going up against friends. Social interaction has always been part of fantasy sports, and DFS sites really lacked that ability. This is also free marketing. People who have already played daily fantasy will now go out and recruit their friends and league members. Those contacts are more likely to play because it’s now a personal challenge or a group event. That person gets hooked on DFS and now they are a repeat player. Customer acquisition cost is driven down because word of mouth marketing is a lot less expensive than 30-second ads every other commercial.
The ability to play DFS in closed leagues was always available, but it wasn’t easy. Players had to make sure they had the correct amount of entries or the contest wouldn’t activate. It was also a pain to set up a contest every week. The league option has been out there for a while, but by making it more prominent and game play and set up easier, it should help draw in new players.
This marketing pitch may actually be more effective in getting new customers. By now, anyone interested in daily fantasy is already involved. The potential customers who weren’t drawn in by incessant advertisements are more likely to be interested in competitions with oeople they know. It’s a referral business. This will also help DFS in public opinion because it isn’t just about gambling, it’s fantasy contests with your friends. That’s much more palatable to the general public and government regulators. DFS is on a slow fight back after getting knocked down a lot during the past year.