What to Expect from Daily Fantasy Sports in 2017

2016 was a rocky year for the daily fantasy sports (DFS) industry, as they suffered through legal battles, regulation, state bans (i.e. New York, Virginia), and having to throw millions of dollars at state lobbyists.

Then, the industry’s two biggest giants — DraftKings and FanDuel — made the bombshell announcement that they’re merging by the end of the year.

So what can we expect from DFS after so many big changes last year?

According to the firm Eilers & Krejcik Gaming, we can expect a lot more uncertainty as we roll into 2017.

First off, the merger between DraftKings and FanDuel needs approval from both the Department of Justice and Federal Trade Commission before it’s made official.

As reported by Inc, another concern is the decline in second and third-tier operators, who, while pulling in less than DraftKings/FanDuel, still make up a portion of the entry fees.

But Inc also points out that DFS weathered a heavy storm and managed to grow 4% despite the barrage of legal and lobbying fees. This is a far cry from the 222% growth that the industry captured from 2014 to 2015, but it’s still a positive uptick.

Eilers & Krejcik expect more growth in 2017, given that less money will be spent on legal fees. But the top DFS sites will still be spending a sizable amount of cash on lobbying efforts.

This is especially the case with Florida, where there’s currently a bill on the table that would legalize and regulate DFS.

Given DraftKings and FanDuel’s consolidation, other sites are expected to combine to cut costs and focus their efforts. This should bring more second and third-tier providers together as they look to survive what’s becoming an increasingly regulated environment.

Eilers & Krejcik writes the following on expected industry consolidation:

“[Consolidation] “will continue – and arguably accelerate – in 2017, as many of the second-tier DFS sites that survived 2016 run out of funding options and are forced to sell or shutter. Who the buyers will be is not immediately obvious (and there may in fact be none), but with so many platforms and user bases on the block, and prices reportedly approaching fire sale levels, the stage may be set for someone to roll up a number of pieces, or for casino stakeholders to acquire their way into the space with low to no risk.”

While it’s unclear how much advertising DFS sites will do in 2017, one thing that’s certain is they will spend less than 2015 — when cable was bombarded by constant DFS ads.