Monday, August 08, 2022

DFS tipped for Australia boom: Can DraftKings top the league?


 In the wake of DraftKings’ recent UK launch, could the daily fantasy sports (DFS) giant be sizing up Australia as one its next overseas target markets? If so, what challenges and opposition awaits?

 Last September, before the commotion surrounding the legality of daily fantasy sports (DFS) in the US, DraftKings CEO Jason Robins participated in a podcast to discuss his startup’s international expansion plans after securing a UK gambling license.  

In it, Robins described Australia as a “really interesting market,” fueling speculation that the southern hemisphere nation was firmly on DraftKings’ radar. Thus far, nothing concrete has materialized in the run up to and after the much-delayed UK launch in February.

But Australia has a lot of appeal. Admittedly, it isn’t a huge market, however it is renowned for being a sports-mad nation, while season-long fantasy sports competitions have been played for almost a quarter of a century.

The country is home to roughly 23 million people which, in comparison to DraftKings’ home market, falls somewhere between the populations of New York and Texas. Of these, around 1.5 million are thought to play some form of fantasy sports, mainly involving Australian football, rugby league and cricket. Season-long fantasy sports began in the early nineties run by newspapers and, while Australian football (AFL) used to dominate fantasy sports, it now accounts for around half the market. Rugby league (NRL) is a clear second, followed by cricket (BBL).

Yet, despite DFS still being a nascent fantasy sports product, more than half a dozen startups burst on the scene last year offering real-money and free-to-play games.  

The largest site by far is Moneyball.com.au with approximately 90 percent of the market, while the likes of Top 8, Fantasy King, Fantasy Games and TradeChamp scrap over the rest.

However, the market is set to become considerably more crowded with a handful of new entrants planning to launch in March to coincide with the commencement of the AFL and NRL seasons. It seems no one wants to miss this DFS boat.

Paul Montgomery, founder of FanFooty.com.au, the largest independent fantasy content site in Australia, says DFS “has barely begun,” but there’s definitely an audience. “There is an appetite for DFS products in Australia due mostly to annual fantasy having dropped off recently, leaving a group of young men with disposable income who know about fantasy but need something new and exciting to rekindle their interest.”

DraftKings offers its US and UK customers traditional American sports, as well as soccer, golf, NASCAR, mixed martial arts and even eSports. Sports like rugby league, cricket and Australian football aren’t currently available, which means the Boston-based outfit would have to build a player base for these sports from scratch in Australia rather than pooling liquidity with the US as was done with the UK launch.

Fintan Costello, managing partner at Revenue Engineers, says DraftKings offering DFS cricket makes most sense because of the upside to expand beyond Australia into other countries (laws permitting) where the game is also popular such as India, South Africa and the UK. Yet he remains sceptical as to Australia’s potential from DraftKings’ perspective.   

“I can get why Australia is attractive; they are sports mad and there’s a sports culture. [But] of all the places I could target in the world, would Australia be top of the list? Probably not.” Moreover, Costello firmly believes DraftKings should aim to “nail” soccer first by building DFS audiences and game liquidity across Europe and elsewhere before using this a springboard to launch more obscure sports like Australian football and rugby league.

“Going outside of the US it has to be a soccer-led product because there’s a huge addressable market for them to target. It’s a no brainer. That gives you the best economies of scale across liquidity and prize pools and it gives you enough traction…soccer is the obvious one to get right first before you go after the less popular sports.”

Part of the reason DFS exploded in the US is due to sports betting being illegal in almost all states. It’s a different story altogether in the UK, with land-based and online gambling being ubiquitous and betting operators having close ties to sport. Likewise, sports betting is legal and widespread in Australia and DFS startups are targeting largely the same customer demographic – young males with disposable incomes.

FanFooty.com’s Montgomery is convinced that Australian betting operators will soon roll out DFS products and quickly dominate a market that, he says, will become “much larger and more diverse” in 2016. “They already have large databases of local customers, infrastructure on the ground and a lot of brand recognition, so they will start well ahead of DraftKings. Existing DFS operators will become irrelevant because they will not be able to compete on anywhere near the scale of the gambling giants.”

Profit margins on DFS are also superior to sports betting, Montgomery points out. “Average DFS rake is somewhere around 9 percent, where I have been told by Australian operators that single-sport wagering can vary from 7 percent down to 3 percent in some of the more predictable sports. DFS profit margins are fixed, which is a big plus for stock market-listed operators who would prefer consistency for the benefit of investors.”

Yet just like online poker, liquidity is akin to oxygen for DFS sites, which DraftKings has in abundance with its core sports. It means that building a solid and loyal user base, as well as a healthy marketing budget, will be key to coming out on top in Australia.

Media support is also important, not just advertising but also editorial content. “The ecosystem of the industry needs to be built from the ground up,” Montgomery explains. “We don't have an ESPN or Yahoo here, or any more than two major newspapers in any major city. Partnering with local heavyweights would be the easiest way to accelerate from zero to 100 – and fast.” In the meantime, the next 12 months are shaping up to be an interesting tussle on the DFS front.

Australia is a unique market with some unique tastes in sport, and that doesn’t come without challenges, but the longer DraftKings ponders its entry, the more likely it is the existing operators could become much harder to catch.

 

 

 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

3rd party / Cookies
Show settings
Contact us

ASIA GAMING BRIEF
PO Box 1139, Macau SAR
Tel: +853 2871 7267
Fax: +853 2871 7264

Asia Gaming Brief