Growth of DFS
FanDuel 4Q Revenue Jumps From $7 Million to $37 Million
Written by Trev Rogers
The enormous growth of DFS (Daily Fantasy Sports) was hard to miss during the 2014-2015 football season with an onslaught of advertisements from FanDuel and DraftKings enticing new players to join each week. There is no doubt that we have seen the “tipping point” for the DFS industry happen before our eyes over the past 6 months. The casual sports fan now MUST know what FanDuel is in order to be included in the most relevant fantasy sports conversations.
FanDuel this past week reported nearly $37 million in revenue for the 4Q 2014. That is a massive increase from $7.4 million posted in the same quarter the previous year. 2014 total revenue was approximately $57 million on the year.
So how did FanDuel grow their revenue at such a rapid rate? For the first time, more than 1 million people paid to play at FanDuel in Q4 2014. In Q4 2013, that number was just over 190,000.
In the DFS industry, Q4 is where you need to show big growth since the NFL is in full gear along with the NBA. Year over year, this is the true test of growth due to player retention rates coming into play for football and new player acquisition for fantasy NBA players.
Speaking of the NBA, after a $70 million funding round in September, FanDuel signed a four-year deal with the NBA to be the league’s official daily fantasy sports service. As part of the deal, the NBA also became a FanDuel investor and took a seat on FanDuel’s board. In case you were wondering, deals like this are the main reason FanDuel is NOT a profitable company. We have to assume the ROI of legitimacy in the eyes of potential players must be very high when they see a FanDuel logo almost everywhere they look in certain NBA arena’s.
Personally, I am not a huge NBA fan, but a funny thing happened once I started to play daily fantasy NBA contests…..I started watching more games. In fact many of my friends who had not watched a game in 10 years, began sending me text messages about a game on ESPN due to it impacting their FanDuel roster for the night. My point, this looks like a win/win scenario for the NBA.
When you visit the FanDuel Investor page, you quickly see many of the growth numbers previously mentioned, but one number that stands out to me is “80%”. FanDuel claims 80% market share of what is roughly a $4 billion industry. I am sure DraftKings.com would argue that the number is closer to 65%, but it is hard to dispute FanDuel’s math when DraftKings has yet to reveal real company growth metrics.
Trev Rogers was employed by a daily fantasy sports website for the past 2 years and is considered a “DFS Insider”. You can follow Trev at twitter.com/TrevRogersBets for the latest DFS industry news.
